AASB 117 and AASB 16: Impact on Telstra's Financial Reporting

Running head: Accounting and Financial Reporting

Accounting and Financial Reporting 1
Executive Summary
AASB 117 was introduced with an intention to introduce the accounting processes and disclosure
for the lessors and lessees. It is applicable to the accounting methods for the entire lease
excluding the leases pertaining to the use of nonrenewable resources such as mineral oil, natural
gas and such other resources. Additionally, it is not applicable to other licensing agreements such
as patents, motion pictures, manuscripts, video recordings, plays and copyrights. The newly
recommended AASB 16 would be introduced in 2019 with an intention include most of operating
leases in the financial statements of the orgnzation . So, this report illustrates the current policies
of AASB 117 as well the proposed AASB 16 regarding the probable impact they would be
creating on the financial statements of Telstra, an ASX listed company as well as the economic
consequences borne by the company as a result of these transitions. The newly adopted
accounting standard would be analyzed in the light of GPFR and recommendations would be
given for preparing the company regarding the new accounting treatment .

Accounting and Financial Reporting 2
Contents
Introduction..................................................................................................................................................3
(a)Description of the lease possessed by the company and their classification and presentation in the
annual report as per AASB 117 and AASB 16.............................................................................................3
(b)Analysis of the probable impacts on the financial position and performance of Telstra due to the newly
applied rules to the present lease contracts...................................................................................................4
(c)Evaluating if AASB 16 would improve the financial reporting in the context of Conceptual Framework
and objectives of GPFR................................................................................................................................5
(d)Conclusion and Recommendations to prepare Telstra for the new accounting treatment.........................5
References....................................................................................................................................................7