Disclosure Requirements and Aspects Related to Lease Transactions

Running head: CORPORATE ACCOUNTING
Corporate Accounting
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Author’s Note

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CORPORATE ACCOUNTING
Table of Contents
Requirement of Part A......................................................................................................2
Requirement of Part B......................................................................................................5
Reference.........................................................................................................................7

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CORPORATE ACCOUNTING
Requirement of Part A
Lease transactions refers to a transaction which takes place between two parties
namely the lessor and the lessee. The transaction involves the assets which is legally
owned by the lessor who allows the lessee to use the asset for a specified period in
exchange of payment or a series of payments (Kazakova and Dun 2014). Lease
transactions are quite common nowadays in business and is a preferred choice when
the business needs to have an asset which is costly. Generally, leases are classified in
two types which are operating leases and financial leases (Yaskova and Alexeeva
2016). The standards which are issued for the effective disclosures of lease
transactions of the business are covered in AASB 117 and also alternatively in IAS 17.
This essay will be focusing on such an aspect and will be explaining the disclosure
requirements and various aspects which are related to lease transactions (Holland
2016).
Operating leases may be defined as a short-term lease which is allowed by the
lessor to the lessee where the rights to use the asset is passed to the lessee and the
risks and rewards which are associated with the asset is retained by the Lessor. The
amount which is charged for the use of the asset is shown in the lessee’s income
statement, however the asset is not shown in the balance sheet of the lessee (Altamuro
et al. 2014). This type of leases is used by business for short-term need basis and
provided by the lessors with a view to take back the asset after the stipulated period and
re-lease the same as the lease period is much lesser than the useful life of the asset.
On the other hand, financial leases are different from operating leases as the risks and
rewards which are associated with the asset is transferred to the lessee. The lessee has