Main topic of this paper is implementation of the new International Financial Reporting Standard 16 which applies to changes in accounting treatment of leases and which has been in force since the first of January 2019. Introduction of the new standard is an extremely significant topic in the business world, therefore this paper is gaining in importance. In previous practice, International Accounting Standard 17 was in use and which recognized two types of leases: operating and financial. In case of operating leases the company was not required to keep the leased property on the balance sheet, but the lease amount was only recorded as a cost in a profit and loss account. In case of a financial lease the company was required to record the leased property as an asset and liability in the statement of financial position of the entity. Recently, the method of reporting the lease has been discussed and the International Accounting Standards Board has reached a conclusion on the introduction of IFRS 16 as a new model of lease accounting. Implementation of the new standard introduces a unique method of accounting for leases that obligates the lessee to record the leased property as a right of use in the company's balance sheet. The paper elaborates in detail all the features of IAS 17 and IFRS 16 and shows the effect of the new lease accounting model on the financial statements of well known Croatian retail chain Pevec joint-stock company. At the end of the paper, the most important insights on the introduction of IFRS 16 are presented and a conclucion is drawn.