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IAS-17 and AASB 117 Accounting Assignment

   

Added on  2020-04-07

9 Pages1260 Words67 Views
RUNNING HEAD: IAS-17 and AASB 1171Changes in IAS-17 and AASB 117
IAS-17 and AASB 117 Accounting Assignment_1
IAS-17 and AASB 1172MemorandumTo: A, B, C, clients in marketFrom: Name of the accountant in small accounting firmCC: other related persons Date: 16th, Sep, 2017Subject: changes and application of new rules and amendment of IAS-17 and AASB 117With the increasing ramification of economic changes and complexity in recordingfinancial and non-financial transactions, there is several amendment and circulations have beenissued by accounting bodies to change the accounting and reporting rules of organization. As perthe new rules and regulations issued by accounting authorities and bodies, financial lease is aprocess for providing finance in which leasing company buys assets for the users and rent it tothem for the certain determined period. Finance lease as per the newly introduced IAS-17 hasbeen bifurcated into two following parts such as operating and financial lease. These both typesof lease is based on the formation of lease and undertaken terms and conditions by the leasersand lessee. Classification of leaseA lease is classified as fiancé lease if it transfers all the risks and rewards and incidents toownership. However, classification of lease depends upon the inception of lease. However, with
IAS-17 and AASB 117 Accounting Assignment_2
IAS-17 and AASB 1173the change in IAS-17 and applicability of AASB-117, there are following principles that shouldbe applied in the financial statement of lease.At the time of commencement, finance lease should be recorded as assets at the lower of fairvalue of assets and payment made by lease.Depreciation charged on the assets and depreciation policies adopted by organization shouldhave leaser time than lease time.In case of operating lease, all the expenses and amount paid should be charged from the profitand loss accounts of company (Chand & Cummings, 2008).Newly amended lease rules and regulations as per the IAS-17 and AASB-117As per the newly introduced lease rules and standard. All the companies requirecompanies to bring majority of operating lease on the balance sheet. Property and other fixedassets will be accounted for the lease from the time of right of use. In order to evaluate the leasefinancial metrics, there are several measures such as gearing ratio, assets turnover and EBITDA.In the latest amendment and notification issued by international financial reporting authorities, itis considered that all the international lease and applicable rules and regulations of lease preparedas per the IAS-17 will be superseded by IFRS 16 lease (Accounting, Part & Plans, 2015).As per the newly introduced disclosure requirement of AASB-117, it is observed that there areseveral disclosures which should be made by companies undertaking financial lease such as
IAS-17 and AASB 117 Accounting Assignment_3

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