AASB 16 Accounting Standard for Leasing - Implications for Telstra Group

AASB 16: Contemporary Issues 1
Contemporary Accounting Issues
AASB 16 accounting standard for leasing
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Word Count: 1580

AASB 16: Contemporary Issues 2
Executive Summary
The study seeks to analyse the implication of the AASB 16 accounting standard for leasing and
its impact on the financial performance of Telstra Group. Telstra operates in the Australian
telecommunication sector and provides several communication services to the market. AASB 16
have significant effects on the financial performance of Telstra. The new accounting standard for
leasing requires companies to disclosure operating leases in the balance sheet. As a result, the
amount of interest in rental expenses would increase. Moreover, both the EBITDA and EBIT will
increase while the net income will decrease. Telstra Group Company will be required to
recognize 4,124 million of liabilities in its balance sheet. Generally, AASB 16 brings about
transparency, comparability, and reliability of financial statements and reports. Comply with
AASB 16 Telstra should: First, improve the collaboration between its departments. Second,
invest in training of its employees on the applicability and impact of AASB 16. Third, seek the
help of lease experts to develop an internal framework that will guide the company towards
complying with the standard. Fourth, invest in technical and system resources that are required to
abide by the AASB 16.
Table of Contents

AASB 16: Contemporary Issues 3
Executive Summary..........................................................................................................................2
Introduction......................................................................................................................................2
Application of the AASB 16, Leases...............................................................................................3
Analysing the impact AASB 16 on Telstra......................................................................................4
Positive implications on various stakeholders about decision making............................................6
Conclusion and Recommendations..................................................................................................7
References List.................................................................................................................................8
AASB 16 accounting standard for leasing contemporary issues