Lease

Project: Lease

ACCT 232

5/18/2011

Introductory

The purpose of this paper is to talk about the lease, including Lease reorganization, measurement and presentation. And then we introduce some comments about this latest lease including majority and minority opinions. It is my reveiw at last.

Objective of the Leasing Project

In July, 2006, the Board voted to add to its agenda a project on lease accounting. The project will be conducted jointly with the US Financial Accounting Standards Board (FASB) and is expected to result in the publication of a joint discussion paper in 2008.

The project will reconsider all aspects of lease accounting and is expected to fundamentally revise the way lease contracts are recognized in the financial statements of lessees and lessors. The Board directed the staff to establish a working group of individuals with significant experience and expertise in lease accounting to assist the staff and the Board with this project.

(ifrs.org)

To explain the reason for adding the project to the agenda, I find two paragraphs in Exposure Draft that “leasing is an important source of finance. Therefore, it is important that lease accounting provide users of financial statements with a complete and understandable picture of an entity’s leasing activities. The existing accounting models for leases require lessees to classify their leases as either finance leases or operating leases. However, those models have been criticized for failing to meet users’ needs. In particular they omit relevant information about rights and obligations that meet the definitions of assets and liabilities in the boards’ conceptual framework. The models also lead to a lack of comparability and undue complexity because the difference between finance leases and operating leases is so distinct. As a result, many users need to adjust the amounts presented in the statement of financial position to reflect the assets and liabilities due to operating leases....