Accounting for Leases

Running Head: ADVANCED FINANCIAL ACCOUNTING
ADVANCED FINANCIALACCOUNTING
Name of the Student
Name of the University
Author Note

1ADVANCED FINANCIAL ACCOUNTING
Table of Contents
Introduction................................................................................................................................2
Background of Company.......................................................................................................2
Discussion..................................................................................................................................3
Descriptions of the Accounting Concepts..............................................................................3
Changes Incorporated in New Accounting Standard for lease AASB 16..............................4
Key Disclosures made by Company on Accounting for Leases............................................7
Effect of Transition to AASB 16 from AASB 117............................................................8
Conclusion..................................................................................................................................8
Reference..................................................................................................................................10

2ADVANCED FINANCIAL ACCOUNTING
Introduction
Lease is the written or the implied contract with the help of which the lessor or the
holder of specific asset such as land, machinery, equipment or building. It helps in granting
the second party that is lessee, the right for exclusive possession as well as using for the
specific period as well as under the specified conditions in the return of the lease payments.
The IASB has issued leases IFRS 16 on January 2016. IASB is independent as well as private
sector organization, which develops as well as approves the IFRS. Further, the introduction of
this new model requires the lessees for recognizing all the leases on the balance sheet that is
except in case of leases of short-term as well as leases of the low value assets (Brumm and
Liu 2019).
Hence, under this assignment, discussion will be on the different accounting concepts
used by the Transurban Group FP Ordinary Stapled Securities. Further, discussion will be on
the changes incorporated in new standard of the accounting for the leases AASB 16.
Moreover, discussion will be on the summarization on the key disclosures made by the
company for the leases including the transitional provisions. Lastly, effect of the transition
from AASB 16 from AASB 117 will be discussed.
Background of Company
The Transurbann Group FP Ordinary/Units Stapled Securities is company, which is
engaged in operation, development, maintenance as well as financing of the network of the
toll road and the management of associated clients and the customer relationships. It is an
Australian company with the roads as well as projects in the Melbourne, Brisbane and
Sydney as well as in the Montreal and Greater Washington. Further, this company is having
thirteen roads in Australian portfolio as well as in US; company is having three roads in
Virginia State, one in Canada and two in the area of Washington DC. Transurban Group is

3ADVANCED FINANCIAL ACCOUNTING
within industrial sector that is listed in ASX indices, which is full owner of the CityLink in
the Melbourne that connects major freeways of three of the city as well as has stakes in the
Sydney and Linkt network motorways tolled in the Brisbane (Transurban Group. 2019).
Discussion
Descriptions of the Accounting Concepts
The financial statements of Transurban group are general-purpose financial
statements for which preparation has been done in accordance with the Australian accounting
standards, Corporation Act 2001 and the other authoritative pronouncement of the Australian
Accounting Standards Board. The Group has adopted all policies of the accounting according
with the Australian standards of accounting and where the standard permits the choices in the
policy of the accounting (Xu, Davidson and Cheong 2017).
The accounting concept used by Transurban group is going concern concept. The
concept of going concern is the fundamental principle of the accounting, which makes the
assumptions that the entity will continue to stay in the business for the foreseeable future. It
refers that company will not be forced for halting their operation as well as liquidating the
assets in near term. This concept is important for the business operations because it helps in
showing the financial stability of business to the shareholders that will affect the price of the
stock (Giner, Merello and Pardo 2019). The guidelines of the business allows the financial
statements readers for making the assumptions that company will continue for long period for
carrying out their objectives as well as commitments. The accountants are in the view that it
will not be liquidating in near future. The concept of going concern is extremely vital for the
generally accepted accounting principles. In the absence of this assumption, the companies
will not be able for accrue or prepaying the expenses. The business organization might not be
long enough for realizing the expenses of the future (Wong, Wong and Jeter 2016).