Yakub02
Banned
The rights and obligations under operating leases often satisfied the definitions of assets and liabilities set out in the conceptual framework yet these were not recognised on the statement of financial position.
Consequently, a lessee’s statement of financial position provided a misleading picture about leverage and the assets that the lessee uses in its operations.
The 2013 World Leasing Yearbook reported that new leases entered into worldwide in 2011 amounted to almost ₦800 billion but under the previous rules the majority of those leases were not reported on a lessee’s statement of financial position
The distinction between operating and financial leases is arbitrary and unsatisfactory. IAS 17 did not provide for the recognition in lessees’ balance sheets of material assets and liabilities arising from operating leases.
Comparability (and hence usefulness) of financial statements will be enhanced by replacing the old treatment with an approach that applied the same requirements to all leases. IFRS 16 removes the finance lease, operating lease distinction for lessees.
The new rules require a lessee to recognise all leases on its statement of financial position (with certain exceptions). IFRS 16 does not change how lessors should account for leases. Lessors still must classify leases as either finance leases or operating leases and account for them accordingly in the same way as before
Consequently, a lessee’s statement of financial position provided a misleading picture about leverage and the assets that the lessee uses in its operations.
The 2013 World Leasing Yearbook reported that new leases entered into worldwide in 2011 amounted to almost ₦800 billion but under the previous rules the majority of those leases were not reported on a lessee’s statement of financial position
The distinction between operating and financial leases is arbitrary and unsatisfactory. IAS 17 did not provide for the recognition in lessees’ balance sheets of material assets and liabilities arising from operating leases.
Comparability (and hence usefulness) of financial statements will be enhanced by replacing the old treatment with an approach that applied the same requirements to all leases. IFRS 16 removes the finance lease, operating lease distinction for lessees.
The new rules require a lessee to recognise all leases on its statement of financial position (with certain exceptions). IFRS 16 does not change how lessors should account for leases. Lessors still must classify leases as either finance leases or operating leases and account for them accordingly in the same way as before
