Leases (Accounting) Essay Example | Topics and Well Written Essays - 1500 words

Leases (Accounting) - Essay ExampleThe proposed changes have come to address this concern wherein structuring the amount presented in the transaction is reduced to achieve a desired accountancy outcome. Also, to decrease complexity, to improve transparency and comparability, and to have more complete fiscal statements, the IASB and US FASB had published a joint proposal to change the existing metre of lease accounting. The scope of the proposed improvement involves US - SFAS 13 and IFRS - IAS 17 wherein the aim is to develop a new single start out instead of the previous direct and finance lease approaches (ACCA 2009). In the proposed right-of-use mode, investors and other users of financial statements need not to make necessary adjustments because every assets and liabilities are now being recognized in the statement of financial position.In this paper, the advantages and disadvantages of the proposed changes from the board exposure draft leave behind be recognized. Also, the impact of the new single approach on the financial statements will be given an appropriate analysis.The exposure draft has been published to solicit comments from the public either positive or negative. The board thinks that the advantages of creating a consistent approach will decrease complexity and at the same time increase comparability of financial statements that will outweigh the disadvantages (FASB 2010 p.93).Advantages. Providing a complete presentation of financial reporting information for users of financial statements will increase transparency, and this is one of the major advantages of the proposal (IFRS 2009 p.4). A complete presentation in the sense that the understated assets and liabilities arising from all lease contracts will now be identified. All of the companys leasing activities either in a form of an assets or liabilities will now be