Accounting Theories

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Accounting
Theories
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Accounting Theories 1
Executive Summary
The report enlightened the reader about the information about the AASB 16 lease accounting
standards present in the environment. The AASB 16 standard replaced the IAS 17 standard so as
to initiate effectiveness in the financial reporting of the companies. Initially IFRS 16 standard
was introduced in the environment that developed the recording of operating and finance lease in
the system so as to avoid the elimination of liability from the books. This standard was further
adopted by AASB. Further, the below mentioned report refers to the reasons for change in the
standard along with the drawbacks in previous standards and the difference between new and old
standards. More details about the lease accounting theory is discussed below:

Accounting Theories 2
Contents
Introduction......................................................................................................................................2
Lease Financing AASB 16..............................................................................................................2
Drawbacks in Previous Lease Standards.........................................................................................4
Reason for Changes.........................................................................................................................6
Difference between Old and New Accounting Standards...............................................................7
Accounting for Lease of Coca Cola Amatil....................................................................................8
Conclusion.......................................................................................................................................9
References......................................................................................................................................10

Accounting Theories 3
Introduction
The objective of this report is to guide the reader regarding the information of the accounting for
lease strategies present in the environment. The AASB 16 standard elaborates about the leasing
rules and guidelines for the organizations present in the external environment. The Australian
Accounting Standards Board is an Australian Government agency that develops and maintains
financial standards and applies it the organizations despite of the fact that it is private and public
sector companies present in Australian economy (AASB 2015). The below mentioned paper
highlight information about the lease financing guidelines about AASB 16. It evaluates about the
drawbacks in the previous lease standards along with the reasons to implement the new AASB
16 lease standards in the environment. The latter part of the report also elaborates lease
accounting activities of ASX listed Coca Cola Amatil company. The company is a well reputed
organization that operates its business functions in the worldwide market. The AASB 16
standard came into existence from 31 December 2019 and changed the majority of lease
accounting initiated by the companies. More details about the paper are discussed below:
Lease Financing AASB 16
Australian Accounting Standard Board (AASB) is an Australian Governmental Agency that
creates and maintains the rules related to Australian financial reporting standards. This rules
created by this agency applies on both public and private sector. The aim of the AASB to create
such rules is to protect the interest of the customers in the environment and develop a framework
at the same time to help the businesses function effectively. AASB 16 is a standard formed by
the AASB only with an aim to increase the effectiveness of the organizations and protect the
interest of the investors as well. The AASB 16 elaborates about the lease accounting present
under the section 334 of the Corporations Act 2001 (Davern, Gyles, Potter, and Yang 2019).
The aim of this standard is to outlay the rules of recognition, measurement, presentation and
disclosure of the leases for the companies in the business environment. This standard aims to
ensure that the lessees and lessors provide adequate information in the financial reports of the
company in such a way that it positively represents the lease transactions initiated in the business
environment. This standard provides adequate information of the user’s financial statement and