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Corporate Accounting and Reporting pdf

   

Added on  2021-06-17

8 Pages1426 Words22 Views
Finance
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Running head: CORPORATE ACCOUNTING AND REPORTINGCorporate Accounting and ReportingName of the Student:Name of the University:Author’s Note:Course ID:
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1CORPORATE ACCOUNTING AND REPORTINGTable of ContentsAnswer to Part A:...............................................................................................................2Answer to Part B:...............................................................................................................5References:........................................................................................................................7
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2CORPORATE ACCOUNTING AND REPORTINGAnswer to Part A:In the context of the business organisations, lease is described as an agreement,in which the lessor conveys to the lessee in lieu for payment or group of payments theright of using an asset for an agreed timeframe. Leases could be of two types, whichinclude finance leases and operating leases. This essay would focus on assessing therelevant disclosures related to finance leases only in accordance with the prevailingstandard, which is AASB 117 (IAS 17). As commented by Henderson et al. (2015),finance leases are those leases, in which all the risks and rewards are transferred to thelessee incidental to the asset ownership. After the end of the option, the lessee mighthave the option to purchase the leased asset at an amount, which would be lower incontrast to the fair value of the asset. Even though new accounting standard, AASB 16,is set to replace AASB 117 from or after 1st January 2017, there would be no impact onthe finance leases, as the standard is designed to enhance disclosure requirements foroperating leases.The disclosures for finance leases should be recognised both in the books of thelessors and the lessees. For the lessees, they need to meet the requirements of “AASB7 Financial Instruments: Disclosures” after which they should make certaindisclosures related to finance leases. In accordance with “Paragraph 31 of AASB 117”,it is necessary for the lessees to disclose the net carrying amount for each group ofassets at the end of the reporting year (Aasb.gov.au 2018). Reconciliation needs to beformed between the overall minimal lease payments in future at the end of theaccounting year along with their present values. After the reconciliation is developed,
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