Hsbc and Eba

We would discuss two Hong Kong Licensed Banks, HSBC (HKEX: 0005) and EBA (HKEX: 0023), the application of the IAS 17 Lease to their Audited financial statement. How the audited financial statement would presented and disclosed following the IAS 17 and HKAS 17 instruction.

IAS has proposed the IAS 17 would be effective on 1 January 2005 and there comes an amendment and effective on the date of 1 January 2010. Simply to describe the IAS 17 would be prescribe the accounting policies and disclosures applicable to leases, for lessees and lessors. Leases are required to be classified as either finance leases, which all risks and ownership would be transfer substantially and give rise to asset and liability recognition by the lessee and a receivable by the lessor. Operating leases which expense recognition by the lessee and with the asset remaining recognised by the lessor. The reason that published the IAS 17 and the amendments would prevent the company refuse to record all lease obligations on the balance sheet. Company may misleading the investors by understated the future lease obligation and commitment.

In the significant accounting policies stated in HSBC Audited financial statement, they applied the IAS 17 amendment lease on the Year 2010 Annual Report. Same as the IAS 17 mentioned, HSBC Group classified the leases into operating lease and finance lease either as a lessee or lessor.

In Year 2010, first year application of the IAS 17 and HKAS 17, the HSBC Group has restated the “Property, plant and equipment” account in Year 2009 and Year 2008 for consistent comparison propose. Some significant interests in long-term leasehold land owned by group had transfer from “prepaid operating lease to Finance lease. (HSBC AFS Year2010 P.35)

Review of Year 2010, Year 2011 and Year 2012, the policy of the Finance Lease and Operating Lease not have highly changes within the periods. The amounts due to lessee under finance lease would after deduction of the unearned...