Relevant Disclosure in Finance Leases as per AASB 117 (IAS17)

Running head: CORPORATE ACCOUNTING
Corporate Accounting
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1CORPORATE ACCOUNTING
Table of Contents
Part A.......................................................................................................................... 2
Introduction..............................................................................................................2
Discussion............................................................................................................... 2
Conclusion...............................................................................................................4
Part B.......................................................................................................................... 5
References..................................................................................................................7

2CORPORATE ACCOUNTING
Part A
Introduction
According to business organisation lease is explained as a contract where
lessor convenes the lessee towards the payment or the sum of payment to handover
the right of using the asset till the time noted in the contract. There are two types of
lease say, operating and finance. The essay will put stress on examine the relevant
disclosure that is in relation with finance leases in accordance to AASB 117 (IAS17).
Bhattacharyya (2013) commented that finance lease is termed as lease where all the
risks as well as rewards are given to the lessee as per their ownership. There is an
option provided to the lessee for purchasing the leased asset that is lower at rate in
compare to the fair value of the respected asset. On 1st January new accounting
standard AASB 16 replaced AASB 117. But there is no impact on finance lease
because the new standard has stressed on operating leases.
Discussion
Lessors as well as lessees both are responsible for disclosing the transaction
of the fiancé lease. In case of lessee requirement as per AASB 7 Financial
Instruments: Disclosures shall be met. As per “Paragraph 31 of AASB 117”, it is
vital on the part of lessee to show the net carrying amount regarding every group of
asset at the end of recording year. Considering the present value of the asset at end
of the accounting period there is a requirement for reconciliation for the minimal
lease payment as a whole. The other step after reconciliation the company shall
require to make all the supportive disclosure as per the three distinct frame of time.
The time frame ranges are one year, above one year and the last one below as well
as above five year (Aasb.gov.au 2019). On the continuation of lease the payments