Accounting Theory and Current Issues: A Report on AASB 16

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Accounting Theory and current issues
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Table of Contents
1. Abstract..................................................................................................................................3
2.Introduction.............................................................................................................................4
3. Critical evaluation of the old accounting standard for lease (AASB 117) specifically
highlighting the drawbacks........................................................................................................5
4..................................................................................................................................................6
5. Why was the change necessary?............................................................................................7
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AMCOR AT A GLANCE....................................................................................................12
GLOBAL FOOTPRINT.......................................................................................................12
View of 2017........................................................................................................................13
Rigid plastic..........................................................................................................................13
Growth drivers......................................................................................................................14
Conclusion................................................................................................................................15
References................................................................................................................................16
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1. Abstract
accounting standard for lease AASB 16 is accounting standard of international. The issues
which are changes in the company is issued because of international accounting standard.in
control of use of identified property, equipment’s and plants in which the lessor gives
permission to control in these problems. Lease accounting was launched on 30th march 2019.
accounting standard lease AASB 16 allow to give properties and equipment’s on the lease
IFRS is published by the IASB. IFRS is a new lease standard it is launched on 1 January
2016. Generally, every company do their property or equipment’s on the lease. AASB
Australian accounting standard board is an agency of government that maintains and
developed financial report. This is used in public and private sector of the Australia
companies and economy. The AASB powers will set out in investment commission act and
Australian securities 2001.the AASB helps to provide financial reports.
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2.Introduction
AASB Australian accounting standard board is a agency of government which helps in
maintain and developing the financial reports of the companies. To protect investors,
consumers, Australian companies the ASICs the Australian securities and investment
commission. There are some frameworks of the Australian accounting standard companies.
 to prepare a financial reports entities required corporation act 2001
 Financial report is prepared by the government of general government sector and for
whole the government.
Accounting standard companies involves requirements that are betterment for the Australian
companies. These requirements are found in Australian accounting standard. These
Australian companies work for private and general companies. The Australian accounting
standard company comprises with-AASB – 1023, AASB-1031, AASB-1038 the first one is
for general insurance contacts second is for materiality and third one is for life insurance
contract. The AASB provides these all the facilities and framework for the Australian
companies and also work for financial report for the companies.
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3. Critical evaluation of the old accounting standard for lease (AASB 117) specifically
highlighting the drawbacks.
Old lease accounting standard make the difference between assets lease & working lease
which includes the balance sheets also capital lease is not incorporated in profits statement
but operating lease was included in profits statement of the, in the new rule it was changed
that any type of lease including operating lease was calculate as assets and liabilities in the
company by the finish of the lease tenure assets of the ownership which was underlined is
shifted (Wong & Joshi, 2015). The AASB Australian accounting standard board which is an
agency of government and its works for whole the sector of the economy in the Australian
companies specialized assets has no use of lessor in any type of the lease (Saidi, F. 2013). It
is normal set of accounting principal it is a principal of accounting standard that maintains the
reports of financial position of the Australian companies. The old accounting standard of
lease sets the assets and liabilities of the companies of Australia. These accounting standard
includes all types of lease like lease for property, lease for equipment’s etc. and in old
accounting standard of the Australian companies these all lease is written in assets and
liabilities and working capital account of the international companies so as it seems that the
old accounting standard of the companies there are some changes and drawback of new
companies (IFRS, 2019). Changes in accounting estimate – a changes in accounting estimate
it was an adjustment of taking out the amount of assets and liabilities or any other expenses
which related with the assets & liability gives consequence in the future benefits and
obligations with the assets & liability of the company.
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4.
AASB 16 Australian accounting standard board 16. A considerable lot of the organizations in
Australia takes a few sorts of renting capacities either that is PCs or corporate office or
vehicles in the past or old bookkeeping standard the working lease ought to be utilized in
resources and liabilities and to be decided sheet which demonstrates the budget report of the
Australian bookkeeping standard. AASB 16 gives rent which to yearly periods beginning or
after 1 January 2019 this difference in the bookkeeping and need most of rent it will be
recorded on the asset report. These progressions will happen in light of the fact that leases as
working that implies numerous substances which having an advantage these are not appeared
in a critical position sheet of fiscal report of the organization, the liabilities likewise
downplayed (Joubert, et. al., 2017). The clients of the budget report like change of the fiscal
report for the working lease writes really taking shape organization choice and the
announcement are not right. New standard mean for substances the understanding chosen by
the organization in the gathering meaning of the leases was recorded in a critical position
sheet of the organization as a non-current right of utilization resources with the associate rent
obligation
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5. Why was the change necessary?
Changes are necessary because old accounting standard does not work properly the
expectation of the companies (Öztürk & Serçemeli, 2016). So it take with the changes which
are necessary for the companies. First the company takes the agency from the government for
the Australian accounting standard board for the Australian companies. Here are some
changes in the policy of accounting standard for the companies. To brigs comparability
between financial statement go different accounting times and periods the policies of
accounting must be fix on this financial statement. The changes which are necessary in policy
of accounting will be enhance the reliability and relevance of detailed provide in the financial
statement. The main rules should be fixed on the financial statement is respectively applied
it. Now the entity should adjust all the amount in the financial statement affected with the
changes in policy of accounting standard. normally the policy of the companies does not
change but if some problems was occurring because of the policy of the company the
company have to change the policy. Changes in the accounting standard are take changes
with the financial statement. The financial statement is very essential in every companies
because it shows the financial position of the company. The main change in the company is
financial statement of the company. The company changes the value of assets when the assets
value is low that the value which was change the assets is new. The low value assets such as
land and building, office furniture, laptops etc. accounting standard of AASB 16 on the first
day the lessee records the liability of the lease of $25,274 the legal fees of cash payment is
$525. The Australian accounting standard board 16 is related to current finance but under 117
the current finance is not same as lease. The head offices of lease of corporate is not included
in AASB 16 (Trombetta, et. al., 2012). Hire purchase agreement is also does not included in
Australian accounting standard board 16. AASB 16of lease accounting complex or different
from the other organization.
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6.
The financing lease is known as the sales lease or a capital lease (Bloom, 2013). The
financing lease is the kind of rent from which a fund organization rent their things from given
timeframe. It is a business course of action where
1. the helps will be chosen by the renter (client or borrower)
2. the benefits will be acquired by the lessor (fund organization)
3. amid the rent the renter will utilize those benefits.
4. for the utilization of benefits the renter will pay a progression of rentals or portions
5. the expense of benefits in addition to procure enthusiasm from the rentals paid by the
tenant will be recouped by the lessor
6. there is a choice with respect to the renter to secure the responsibility for resources
like paying the last rental or deal choice price tag.
Last rent understanding has comparative trademark like contract buy understanding and like
shut end renting the ultimate result will be that the resident toward the end will turn into the
proprietor of theassets, yet have diverse bookkeeping medicines and ramifications of duty.
Tax benefits may be there for lessee to lease an assetrather than purchasing it and this may
obtain a finance lease (Street, 2012).
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7.
Under section 334 of the corporation act 2001 the Australian accounting standard board
launches AASB (Australian accounting standard board) 117 leases (Fox, et. al., 2013). The
main aim of this standard is for lessees and lessors, the policies of accounting and disclosure
to fix in relation of lease.
Finance Lease is a capital rent and deals rent which incorporates legitimate and gives the rent
execution of account organization. In this the money organization is legitimate proprietor of
benefits for the season of rent. As it appears that the lesseeonly work for working lease
however they don't have just working lease they alsohave some offer of the monetary hazard
and furthermore return change in estimation of the benefits of the organization.
Working lease is a rent or contract which permits the utilization of advantages yet it doesn't
give the possession rights on those benefits which are permit to utilize. It is characterizing as
reeling sheet financing implies the advantages and liabilities of lease in future payments
operating lease does exclude in an organization's asset report. The positive bookkeeping
hypothesis gives positive effect of this conduct to the supervisors in light of the fact that
working lease gives the obtaining resources for the utilization. What's more, working lease
does not keep up lease of things to come installment. The chiefs of this working lease have an
advantage from working lease since it has a positive effect from the others. This advantage of
the IASB makes the great overall revenue for the worldwide company. IASB global
bookkeeping standard board it is the free bookkeeping standard board. The IASB changed
name with the IFRS that is worldwide financing detailing standard on 1 July 2010 it is
produced for the reasonable, open intrigue, enforceable and all inclusive acknowledged. It
isn't revenue driven organization. The AASB 16 is think to improve likeness between
organizations that rent resources and organizations that obtain to purchase resources. Since
AASB 16 keep up the accounting report of the acquiring resources by the organizations and
the overall revenue for their organizations the AASB 16 act gives the PCs, hardware's or
office gear's on rent and keep up the monetary records of advantages and liabilities of the
organization (Morales-Díaz, et.al., 2018). The similarity between Australian bookkeeping
standard 16 and universal bookkeeping standard board is IASB is a philanthropic association
or organization act implies worldwide bookkeeping standard work for the not-for-benefit in
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the global organizations and AASB Australian bookkeeping standard board will keep up the
asset report of each gear's which they give on the rent.
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8.
To a portfolio list entity should provide the single discount rate. The AASB 16 is work in not-
profit. The AASB changed into IFRS (Mirza & Ankarath, 2012). The new impact on AASB
is that they issued a new lease that is IFRS 16 which is applicable for ending periods or after
1 January 2019. The IFRS changes the model which applied by lessees. The name model
name is capitalization model. The implementation on AASB 16 which is an individual
company is depending on many decisions which are managed by the company manager. The
decision by manager will be divided into two groups first is alternative accounting treatment
and second was estimation. The company will define these management as a monetary
declaration of the company. The main implementation of the AASB 16 is
The option of bargain purchases to done by the lessee.
The time period of the lease is more than or same to 75% of the assets economic life.
At the end of the lease term the lessors give its ownership of the assets to the lessor.
So if any company purchase or buy the lease assets they have to complete these
implementations from the AASB 16.
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