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Corporate Accounting - Assignment Sample

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Added on  2021-06-16

Corporate Accounting - Assignment Sample

   Added on 2021-06-16

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Running head: CORPORATE ACCOUNTINGCorporate accountingName of the StudentName of the UniversityAuthor Note
Corporate Accounting - Assignment Sample_1
CORPORATE ACCOUNTINGIntroduction:The accounting standard of lease prescribes the disclosure and accounting policiesthat is applicable to leases in terms of both lessors and lessees. It is required by the reportingentities to classify lease as either financial lease or operating lease. An operating lease is acontract under which the remaining assets are recognized by lessors and the lessee recognizesthe amount of expenses. Financial lease on other hand is a contract under which all rewardsand risk of ownership is substantially transferred for which liabilities and assets arereceivable by lessors and recognized by lessee. The account standard that is applicable fortreating lease is IAS (International Accounting standard) 17 that will be superseded by thenew lease standard IFRS 16 that is effective from 1st January, 2019 (Cohen and Karatzimas2017). Discussion:The objective of the applicable lease standard is to prescribe the appropriateaccounting disclosures and policies in relation to both operating and financial lease. Thisparticular standard is applicable to all leases expect for the lease agreements for mineralresources, oil and other resources generative items and licensing agreements for plays, films,manuscripts, copyrights, patents and other similar items. Nevertheless, IAS 17 is notapplicable as the basis of measurement for leased assets such as biological assets held bylessee or lessors under operating or financial lease, investment property under operating leasethat is provided by lessors and property accounted as an investment property by lessee forwhom the fair value model is used (McGeachin et al. 2016). IAS 17 was revised in year 2003, the incremental cost and any initial direct cost inevent of negotiating lease that the lessors incurs should be recognized over the term of lease.When such costs are incurred, they are no longer charged to expense. Since such cost is
Corporate Accounting - Assignment Sample_2
CORPORATE ACCOUNTINGrecognized as expense when there is recognition of selling profit, where such treatment is notapplicable to the dealer lessors or manufacturers. ‘The disclosure related to financial lease as mentioned in IAS 17.31 are listed below:There exist reconciliation between present value and minimum lease payments The disclosure is made about the carrying value of assetsThe present value and amount concerning minimum lease payments thereof at thedate of balance sheet for year 2 through that is combined, the next year and beyondfive years.Recognition of contingent rent is done as an expense. Under any noncancellable leases, for the sub lease the total future minimum amount. The arrangement of significant leases is given in the form of general description thatincludes purchase or renewal options, contingent provisions of rents, borrowings,restrictions that is imposed on amount of dividends and any further leasing(Tsunogaya et al. 2016). The disclosure related to operating lease as mentioned in IAS 17.31 are listed below:Under the noncancellable leases, at the balance sheet date, the amount of minimumamount of lease payments years 2 through five combined, the next year and beyondfive years, beyond five years and the next year (Aasb.gov.au 2018). The payment of sublease and any other lease is recognized for the period as anincome. Under noncancellable sub lease, it is required to recognize the total future minimumsublease. Recognition of expense is done as an expense
Corporate Accounting - Assignment Sample_3

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