Many companies use leases to acquire higher priced assets.
Leasing is an important activity for many entities. Presently some leases are capitalized, and some are treated as operating leases.
Opponents of this method criticize the accounting treatment because the present models do not meet the needs of users of financial statements; they do not always provide a faithful representation of leasing transactions. One reason is that operating leases are not capitalized. The International Accounting Board has issued a Proposed Accounting Standards Update (Revised) (Links to an external site.) (Topic 842) which proposes significate changes to lease accounting.
Write a five- to seven-page paper, formatted according to APA style as outlined in the Writing Center (Links to an external site.). Your paper should cite five of the research links below and include an in-text citation, and a quote from the article. Section heading titles should be centered and in bold.
The links below may be used for your research. If you would like to curate your own resources, you may do so.
• Preparing for the upcoming leasing standard: What a lessee needs to know (Links to an external site.)
• Lease accounting: Keep pushing ahead (Links to an external site.)
• New Accounting Proposal on Leasing Portends Big Changes (Links to an external site.)
• IFRS—Leases (Links to an external site.)
• New Lease Standards May Demand Two Sets of Books (Links to an external site.)
• New Accounting Standards Will Affect Lease Reporting (Links to an external site.)
• Letter to FASB Re: Lease Accounting (Links to an external site.)
• All Systems Go for FASB Lease Accounting Overhaul (Links to an external site.)
• The Leasing Standard—A Comprehensive Look at the New Model and Its Impact (Links to an external site.)
• IASB Issues Leases Standard; FASB to Follow (Links to an external site.)
• New FASB Lease Standard Could Inflate Balance Sheets (Links to an external site.)
In your paper,
• Identify the present rules for evaluating a lease and whether it is capitalized or not.
• Summarize the new lease accounting rules.
• Distinguish the effect these new rules have on the balance sheet, income statement, and cash flow statement.
• Differentiate what industries would be affected more than others.
• Compare the proposed new Type A and B leases.
Summarize the effects the Proposed Lease Standards would have on the following: presentation on the financial statements; how assets and liabilities would be computed; the effect to lease expense due to “front-loading;”
