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IAS 17 Proposed Changes in the 2013 Exposure Draft - Essay Example

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The essay contains the proposals as to changes in IAS 17 which will affect substance over form as leases will cause an economic impact on entity’s and such a transaction will require double recording as opposed to a single transaction…
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IAS 17 Proposed Changes in the 2013 Exposure Draft
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Download file to see previous pages The lessees are advised against recognizing assets as well as liabilities that result from operating leases. That concept has over time attracted the attracted significant request from users of financial statements as well as others to enhance changes that will ensure that lessees are upheld to recognize liabilities as well as assets in the financial statements.
The IASB, as well as FASB, engaged in a joint project that focused on developing the relevant measures to ensure that lease assets will be recognized in the statement of financial position. The two bodies deliberated on revisiting the 2009 Exposure Draft that was issued in 2009 to seek preliminary views and FASB accounting Standards update issued in August 2010 to enhance forming an Exposure Draft in 2013 (Ellis, 2014). The proposed Exposure Draft of 2013 will only affect entities that engage or are engaged in lease irrespective of some specified scope exemptions. The Exposure Draft 2013 would supersede IAS 17 leases in IFRS.
The primary principle of the proposed requirements is that a company will ensure recognition of assets as well as liabilities that result from lease agreements. The proposed requirements serve as a way of improving the existing lease requirement that fails to require lease assets together with liabilities to be recognized by the majority of lessees. The principle will, therefore, require lessees to ensure recognition of assets as well as liabilities for leases that possess a maximum possible term of more than one financial year (EFRAG, 2013. A lessee will have to recognize the lease liability as well as the underlying asset for the lease term. In recognition, measurement as well as the presentation of an entity’s expenses. ...Download file to see next pagesRead More
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