Current Accounting Issues: AASB 16 and FASB Proposals Review

This report provides a detailed analysis of current developments in accounting thought, focusing on two key areas: the impact of AASB 16 on franchisees and franchisors in Australia, and a review of proposals by the FASB concerning share-based compensation for employees. The analysis of AASB 16 explores how the standard, which requires Australian companies to recognize operating leases on their balance sheets, affects the presentation of financial commitments and the potential increase in financial reporting risks. It also touches upon the importance of consulting accounting professionals to navigate these changes effectively. The second part of the report examines the FASB's proposed updates on stock compensation accounting, considering comments from various respondents and offering insights into the implementation and impact of these proposed standards. The report emphasizes the need for businesses to adapt to these evolving accounting standards and to seek expert advice to ensure compliance and transparency in financial reporting. Desklib provides students access to similar solved assignments and past papers.

Running head: CURRENT DEVELOPMENT IN ACCOUNTING THOUGHT
Current development in accounting thought
University Name
Student Name
Authors’ Note

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Table of Contents
Task 1:........................................................................................................................................2
Task 2.........................................................................................................................................6
References................................................................................................................................13
Appendix..................................................................................................................................16

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Task 1:
The report at hand elucidates in detail about at the article published on 29th June of
the year 2018 declaring about alterations made by the Australian Accounting Standards
Board on the standard AASB 16. The accounting standard AASB 16 is said to affect
franchisees along with franchisors and talks about presentation of leases in the balance sheet.
The article presented by Andrew Grima talks about the modifications carried out in the
standard AASB 16 that essentially influences both franchisees as well as franchisors. In
essence, alteration in the standard has directed towards transformation in the overall structure
of the balance sheet assertion (Rutherford, 2017). In this connection, it can be said that
innovation leads to presentation of leases in the balance sheet assertions of the firms.
The article selected has presented analytical evaluation of diverse advantages of the
novel trends of the accounting regulation. In this article, the author has indicated the fact that
the alterations are supposed to bring about alterations in the process business is undertaken
between franchisors with franchisees. Schneider (2015) suggests that the franchisee refers to
the independent industrialists who acquire franchise stores of different well-known subsisting
brands and invest in their own funds and utilize the brand name along with technical
expertise and competence of the franchiser to carry out the business. For instance, there are
franchise business is commonly found in companies such as Coffee club, Gelatissimo,
Poolwerx and many others. These companies carry out franchise business and permit
conduction of business and use of their brand names by various franchisee segments.
Essentially, it can be said to be obligatory for both franchisers as well as franchisees to
adhere to the prescribed standards of accounting system of the land as these businesses might
possibly become extremely complicated and difficult otherwise. The franchisers have the
need to undertake numerous accounting exercises for the franchisees and no matter what

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goods are marketed. The government is for all time attentive about any business actions that
are taking place are beyond the authorization. Thus, the Australian government has created
the (AASB) that is essentially an agency and bureau of the government that generates and
presents principles and values of budgetary reporting that are essentials in private as well as
open businesses of the Australia. Each nation possesses their own out-and-out committed
agencies to be careful that the regulations of financial activities within the nation are well-
regulated and at the same time standardized. Essentially, the AASB is expected to establish
the novel standard of leasing (referring to the standards of AASB 16) that requires Australian
companies to introduce operating leases in firm’s balance sheets. The novel standards refer to
the fact that leases particularly the ones that were held off balance sheet in the past is now
accepted to be accounted. It is therefore termed as authority of using asset as well as lease
liability.
In this current article, the author has mentioned that the new activity might perhaps
affect majority of the businessmen in Australia to certain extent. For that reason it is
compulsory for industrialists and everyone involved to correctly reviewing the novel standard
of leasing that is the “AASB 16” prescribed by the Australian Accounting Standards Board.
In addition to this, writer of the current piece has also mentioned that the risks involved the
financial reporting may well increase due to the implementation of the leasing standards.
Particularly, Shi et al. (2017) suggests that it is crucial for business entities to make certain
that there remains no indiscretion occurring within the system of financial reporting of the
firm.
As mentioned in this current piece of writing, AASB 16 is necessarily the lone model
of lessee that takes account of a lessee for identifying both assets as well as liabilities for
diverse leases that is within a time period of over 12 months, if not the underlying asset
possesses a lower value. Particularly, lessee is necessary to identify an authority-to-use asset

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reflecting its authority to make use of basic leased asset (Lawyers et al., 2018). Also, it is
important to identify a lease liability reflecting requirement to disburse lease payments.
Conversely, the AASB 16 to a large extent takes account of the lessor for different
accounting necessities. According to the standard the lessor keeps on making a distinction of
its leases (that is categorisation of finance leases and operating leases). Also the lessor takes
account of different measures of the leases in a different way (Atkinson et al., 2014).
According to the current article under deliberation, Australia firms have the need to
consult accounting professionals as regards the novel standards of AASB 16 in a bid to
comprehend the new standard of AASB 16 (Lawyers et al., 2018). This can help in acquiring
knowledge and awareness regarding the level of impact the firms might face with specific
qualified knowledge regarding efficiently executing the alterations in accounting procedures
that in turn can lead to alterations in the structure of the balance sheet. Management of the
businesses, as recommended by the author, needs to carry out detailed observation of systems
of accounting for confirming that the firm can capture and at the same time carry out
documentation of financial data (Hao & Liu, 2017).
Furthermore, the article also emphasizes the significance of recording alterations that
may perhaps direct towards development of framework of balance sheet assertions of the
firm. Also, the article under deliberation explicitly argues that financial announcement may
perhaps be presented in a “less healthy manner than what the same looked like beforehand
before the adjustment in the standard (Islam, 2015). In addition to this, the businesses might
also have the necessity to think about the way this can influence covenants along with
financial key performance indicators (KPI) presented by the bank. Moreover, it is important
to take into consideration the influence of standards on different sponsors of the firm with
whom corporations are involved.

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The current article under consideration can be considered to be a perfect directive for
business owners that can assist them in adapting new financial modification of accounting
standard of Australia. In this case, the author of the article has also elucidated in detail about
the technique that the businesses that need to consideration for development of rental
payment frameworks as per directives stipulated under AASB 16 (Paulsson & Rosati, 2017).
This can be prove to be of great importance for different owners of businesses since this can
assist in questioning accountants concerning the novel standards in an effectual way.
Also, drop in turnover rent that is within the purview of the novel requirements is a
matter of concern that need to be taken into account in this regard. The current article also
talks about implementation of the standard of AASB 16.b. in the form of accounting standard
of Australia as of the period January 1, 2019. The article mentions that as of the period
January 1, 2019, the AASB is scheduled to introduce a novel standard of accounting that is
essentially the AASB 16 that can facilitate businesses in reflecting operating leases in the
balance sheet assertions of the firm (Trottier & Gordon, 2017). As per the authors of the
article, the modification would indicate that the leases that were previously detected off the
statement of the balance sheet now need to be accounted in as right to utilize assets as well as
lease liability. In essence, the alteration in the novel idea would essentially assist in making
certain that there exists higher level of transparency and thus might provide a more
appropriate presentation pertaining to financial commitments of the business enterprise
including lease liabilities.
Then again as mentioned in the current article under consideration, this novel
agreement can direct the way towards proper way of presentation of liability. As stated by the
author, the alteration might probably influence majority of Australian firms to certain extent.
Therefore, Private interest theory can be referred to in this case. This can be said to be related
to the main regulatory theme which stresses the requirement for standard setters to interfere

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owing to market inefficiencies and inability to regulate properly. For the purpose
implementation of the new standard regarding accounting system of leasing, the standard
setters have the need to intervene. Shi et al. (2017) suggests that the capture theory can also
be mentioned in this regard as the same has the intention to develop validation that interest
groups are in due course engaged in regulation. In essence, this theme mentions the fact that
regulation is presented in response to varied demands put forward by interest groups that
intend to optimise the earnings or interests (Deegan, 2013). The modified amendments are
also presented in response to the demands of businesses and other interest groups and to
maximise returns of their members (Deegan, 2013).
Regrettably, there are different complexities as well as issues that can probably stem
from execution and functioning of the standard of AASB 16 (Pelger, 2016). In essence,
changes might possibly direct towards enhancement in the overall risks connected to financial
as well as commercial system of reporting. Finally, the writer brings up in this particular
article that the primary motive of scripting this article was not to provide a ultimate
accounting guidance to the owners of businesses but to emphasize significance and procedure
of consulting. This can help accountants in presenting their views regarding arriving
alterations that are to be encountered by Australian firms for modification of the Accounting
Standard of AASB 16 on accounting system of leases.

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Task 2
Executive Summary
Analysis of proposals declared by the FASB (Financial Accounting Standards Board)
concerning share based system of payment for workforces relatable to stock based system of
compensation is explained in detail in this paper. Topic numbered 718 that is on proposed
update on accounting standard for compensation (that is to say specifically, stock
compensation) is taken into account. Essentially, this proposed update refers to the topic on
“upgrading Different Nonemployee Share Based system of payment and accounting”. There
are essentially four respondents who present their judgements on the basis of specific
concepts of exposure draft. In this way, the current piece helps in carrying out a
comprehensive analysis and illustrations of surplus tax benefit and recognition of deficiency
that falls under the purview of income assertions.
Introduction
The proposal discussed herein this segment refers to suggested accounting regulations
and standards and updates on compensation of stocks (indicating to topic no. 718) (Proposed
Accounting Standards Update—Compensation—Stock Compensation (Topic 718):
Improvements to Nonemployee Share-Based Payment Accounting, 2017). This specific
standard of accounting refers to improvements to accounting system for share based
payments to different non-employees. In essence, it can be noted here that improving
guidelines stated herein is obligatory for lessening overall cost and associated difficulty
associated to maintenance and development of efficiencies of data that are mentioned by
financial statements.

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The study considers four respondents from different comments made to the proposals
and collects the same particularly from the official websites of accounting board under
consideration (Proposed Accounting Standards Update—Compensation—Stock
Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment
Accounting, 2017). Thorough analytical review of the comments from different respondents
can exert influence on analysis of accounting standards and aid in understanding the issues
that are under reflection. In addition to this, the objective is also to properly comprehend the
process of execution of guidelines of accounting that in turn can enhance standards of
accounting. Furthermore, the piece also has the aim to analyse different comments that
includes both comments of agreement as well as disagreement. These statements of
comments essentially can help in the process of arriving at specific outcomes as regards
analysis of precision of accounting regulation.
Statement of proposals
The current segment explicates in detail about accounting procedure of non-employee
share payments. Fundamentally, this proposal can be said to be vital for opinions, emotions
and sentiments of diverse non-employees of enterprises. A suggested by Pelger (2016), a
strong bond and association between enterprises as well as their workforces can help in the
way of enhancement of positive business environment. As a consequence, it can be said that
development in different types of payment processes can be said to be crucial.
In essence, accounting standard presents different types of thoughts with thorough
knowledge and affects enterprises belonging to different segments and industries. This too
influences enterprises to join in the process of putting across their opinions. In this way, it can
be said that requisite feedback can be acquired on the presented proposals for improvement of
standards and regulations. In this way, interests of public can also be satisfied in a better way.

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Essentially, Questions pertaining matters of transformations are also mentioned in the FASB.
It can be observed as an accountability of management of enterprises to answer and send a
reply to the questions presented in exposure draft forms and discuss about accord otherwise
disagreement. Discussion of agreement or discord therefore helps in understanding the
suitability and acceptance of the proposals presented to the enforcers of the regulations
(Proposed Accounting Standards Update—Compensation—Stock Compensation (Topic
718): Improvements to Nonemployee Share-Based Payment Accounting, 2017). Also, diverse
questions presented in the form of the exposure draft and answers presented as feedback of
different business enterprises essentially can help in serving public interest. Therefore, it can
be said that the questions undoubtedly need to be answered in public interest.
Debates
It is illustrated in detail regarding the feedback collected from different respondents.
The feedbacks are studied in detail for gaining knowledge and stay informed regarding
consent and dissent concerning changes proposed in the exposure draft (Schneider, 2015).
Intrinsically, the changes proposed from diverse respondents are hereby explained
illustratively are hereby mentioned below:
Corporation Name: Visa Inc
Visa is well known enterprise that has extensive operations in the area of mdern and
advanced technologies of online payment. This company has the intention to establish
improved payment procedure throughout the world through constant research and
development towards development of new, improved and advanced technologies. In this
connection, it can be said that the management of this firm presents their opinions in the form
for comments regarding the said proposal by FASB and suggest few things for improvement.
Analysis of the comment presented by this firm reveals that the business concern reacts to

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different questions mentioned in this exposure draft. In addition to this, this company also
duly mentions about their agreement to the proposals and suggestions put forward by the
regulation authority that is the FASB, contradicting different suggestions of supplementary
advantages of taxation and inadequacies of assertions of earnings. Analysis of their comment
reveals the fact that the management of the company put full faith, trust and confidence in the
proposals presented by the regulating authority (that is the FASB) and also considers that this
specific proposal for improvement can help in the process of improvement of operations of
the business by way of mitigation of the difficulties that holds back effective operations of
the business enterprise (Shi et al., 2017). Further, it is said that this proposal can help in
augmentation of volatility of cost linked to income tax.
Corporation Name: Heiskell and MacGillivray and Associates
This specific business enterprise engages in the audit as well as operations related to
accounting particularly in Australia and deliver reactions to different queries associated to
enhanced along with novel accounting directives. Analysis of their feedback in the form of
comment shows that they agree to system of termination and closing of mainly PIC pool of
accounting (Trottier & Gordon, 2017). Particularly, they help in reducing expenditure of
enterprises together with intricacies related to system of accounting. In addition to this, this
business enterprise also agrees to diverse associated costs for particular pay system and
incorporation of the same in the declaration of firm’s earnings. In this way, the benefits of
specific systems of taxation together with deficiencies can be considered to be important and
have the need to be properly executed. In addition to this, business enterprise is also in accord
to the fact that there is necessity to limit overall delays in the process of identification of
excess tax advantage (Witzel, 2016).
Corporation Name: Raytheon Company

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Raytheon Company is a renowned USA based business enterprise that functions in the
area of innovation, advanced technological applications and advanced technologically
induced offerings such as defence, security tools as well as equipments, software for civil
market throughout the world. Analysis of operations of the firm divulges the fact that the
business enterprise put great effort to design and develop corporate governance of the
enterprise. It can be seen from the comments that the firm aptly responds to second, third and
fifth question presented in the exposure draft (Xu et al., 2017). Also it can be hereby
observed that the firm put forward diverse contradicting opinions and viewpoints that are in
opposition to what the firm Heiskell and MacGillivary and Associates has mentioned
(referring to responses to question 2). Essentially, they have presented an opposite viewpoint
regarding the suggested systems and processes of the standard as far as detection of
additional benefits of tax are concerned along with inadequacy of tax stated in assertions of
income. On the other hand, the management of the particular enterprise also points out
towards the fact that the regulation authority FASB has the requirement to follow a particular
framework. In this way, different advantages as well as lack and dearth of supplementary
taxation are revealed especially in firm’s equity (Xu & Doupnik, 2016). Further, it can be
added that this business enterprise also suggests usage of specific symmetrical approach of
essentially equity that sequentially can present enhanced results.
Corporation Name: American Bankers Association
This is a particular business concern in which different participating banks function in
the area of USA. Fundamentally, it can be hereby seen that business unit praise the changes
proposed by the authority FASB regarding share based system of payment (Zeff, 2016). In
addition to this, it can also be mentioned herein that business entity reacts to diverse
questions and talks against to only a single question of the exposure draft in the comments.

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Importance of the current proposed change
The proposal and recommendation is said to very vital particularly in the areas of
system of accounting related to share based system of payment (Walker, 2016). It can be
hereby said that this can augment remuneration using firm’s stocks. In essence, the present
proposal has the intention to enhance the way firm declare their results in the company
reports. In addition to this, this proposal also has the aim to decrease overall pressure and
stress of work of diverse professionals of accounting (Witzel, 2016). Thus, the notion of
particularly the public interest notion that is essentially an economic concept related to
overall welfare can deliver hypothetical validation to standards and in this context can be
regarded to be the most important theme.
Conclusion
The above mentioned study helps in analytical review of the proposed transformations
and suggestions by the regulation authority that is FASB (referring to topic number 718).
This piece evaluates the proposal to tehn changes in the scheme of accounting share based
system of payment. This study at hand thereby helps in understanding and gaining deep
insights regarding responses of different respondents to the proposals. Excluding only a
single participant (considered herein the study) all other respondents have presented their
views in favour of the proposals put forward by FASB regarding recognition of treatment and
benefits of tax and tax deficit in enterprises’ earnings pronouncements. Furthermore, this
study also mentions the fact that other suggestions have also been permitted by diverse
partakers, nonetheless, this current proposal is not taken into consideration as this may
perhaps cause instability in the statement of earnings. Thus, it can be hereby suggested that
developments in this specific area can help in improvement of specific situations that are
attached to system and processes of accounting share based system of payment.

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Appendix
Appendices 1
Source: https://www.colemangreig.com.au/News-1120-Changes-to-the-Australian-
Accounting-Standard-Affecting-Franchisees-Franchisors-Bringing-Leases-Onto-Your-
Balance-Sheet.aspx

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Appendices 2

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