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Accounting for Leases - Changes in AASB 116 and AASB 117

Prepare a report for the CFO of Myer Ltd, analyzing the potential impacts of the changes in the accounting standard AASB 16 Leases on the financial reports of the company.

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Added on  2023-06-04

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This article discusses the changes in accounting policies and standards for leases as per AASB 116 and AASB 117. It covers the main terms of lease agreements, accounting of rent, and tax accounting of leases in Australia. The potential impact of the changes on financial presentations and ratio analysis is also discussed.

Accounting for Leases - Changes in AASB 116 and AASB 117

Prepare a report for the CFO of Myer Ltd, analyzing the potential impacts of the changes in the accounting standard AASB 16 Leases on the financial reports of the company.

   Added on 2023-06-04

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Accounting for Leases
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Accounting for Leases - Changes in AASB 116 and AASB 117_1
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Executive Summary
Accounting policies and standards changes from time to time. Accounting for leases will
definitely change depending on the accounting policies and standards set by the AASB116 and
AASB 117. The leases are classified as either capital leases of operating leases by the AASB
116. In lease arrangements and agreements, the owner-lessor has an agreement to rent an asset to
the tenant lessee. The asset may be a machinery, building, land or equipment. The IASB has
estimated that about 85% of all leasing obligations of trade organizations using IFRS and US
GAAP are not reflected in the financial statements as liabilities of the organization. But these
obligations are quite real, and most of the creditors and rating agencies have always taken into
account the leasing obligations when assessing the financial condition of companies.
Accounting for Leases - Changes in AASB 116 and AASB 117_2
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Table of Contents
Executive Summary.......................................................................................................................1
Introduction....................................................................................................................................1
Revolution in AASB 116................................................................................................................1
Main terms of the lease agreement...............................................................................................2
Terms and amount of rent............................................................................................................3
Accounting of rent.........................................................................................................................3
Tax accounting of leases in Australia...........................................................................................3
Conclusion......................................................................................................................................3
Accounting for Leases - Changes in AASB 116 and AASB 117_3

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