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In this video tutorial, Sylvia from ifrsbox.com explains the basic method of lease accounting under the newest standard, IFRS 16. She uses a simple example of a lessee renting cars and making payments in arrears. The incremental borrowing rate is important for calculating the right of use asset and lease liability. According to IFRS 16, the lessee should recognize these at the commencement of the lease. The lease classification is no longer required, and the right of use asset is calculated based on the lease liability and payments.