Which type of lease does IFRS classify without any distinction for operating leases?

Under IFRS 16, the distinction between operating leases and finance leases is effectively removed for lessees, which is a critical change from the previous accounting standard, IAS 17. In this context, all leases, with certain exceptions, are recognized on the balance sheet, requiring lessees to account for a right-of-use asset and a corresponding lease liability. This significant shift means that regardless of whether a lease was previously classified as an operating lease or a finance lease, it is now treated similarly for accounting purposes.

The correct classification acknowledges that IFRS 16 mandates the same accounting treatment for leases, eliminating the operational categorization that existed before. This allows for a more transparent and comprehensive approach to lease accounting, reflecting the economic reality of the lease obligations.

In terms of other options, long-term leases could still be classified under operating or finance leases under previous standards, and high-value leases do not directly align with IFRS's lease classification approach. Similarly, while short-term leases are indeed treated differently (less than 12 months may not need to be reported on balance sheets under certain conditions), they still fit within the broader category that requires lessee treatment under the same lease accounting standards consistent with finance leases. Therefore, recognizing the removal of this