TAILIEUCHUNG - Lecture Framework of financial reporting - Lecture 24

The main contents of the chapter consist of the following: Substance over form, substance over form with a finance lease, accounting treatment of the commercial substance of a lease, lease and the definition of an asset, recording a finance lease,. | Revise lecture 24 1 Substance over form 2 Substance over form The meaning of substance over form In many types of transactions there is a difference between the commercial substance and the legal form: 3 Substance over form The meaning of substance over form Commercial substance reflects the financial reality of the transaction Legal form is the legal reality of the transaction Accounts are generally required to reflect commercial substance rather than legal form. 4 Substance over form with a finance lease When an asset is leased under a finance lease there is a difference between the legal form of that transaction and its commercial substance: Legal form: The asset remains legally owned by the party leasing it out (the lessor) 5 Substance over form with a finance lease Commercial substance: The party making the lease payments (the lessee) has the use of the asset for most or all of its useful life. The lessee has effectively purchased the asset by taking out a loan (the finance lease commitments). 6 Accounting treatment of the commercial substance of a lease As the commercial substance of finance leases is that the lessee is the effective owner of the asset the required accounting treatment is to: Record the asset as a non-current asset in the lessee’s statement of financial position. Record a liability for the lease payments payable to the lessor. 7 Lease and the definition of an asset IAS 17 is mainly concerned with regulating the accounting for finance leases. The IAS 17 treatment follows the definition of an asset in the IASB Framework for the preparation and presentation of financial statements: ‘an asset is a resource controlled by the entity as a result of past events and from which future economic benefits are expected to flow to the entity’ Ownership is not necessary, control is the essential feature. 8 Lease and the definition of an asset IAS 17 thus argues that an asset leased under a finance lease must be recorded as an asset and a corresponding .

• Tài chính doanh nghiệp
• Financial Reporting
• Framework of financial reporting
• Lecture Framework of financial reporting
• Regulatory system
• Financial statements
• Finance lease
• Reporting financial performance
• Reporting financial performance
• Financial accounting
• International financial reporting standards
• Financial reporting standards
• Merchandising operations
• Internal control
• Stockholders’ equity
• Financial statement analysis
• Financial information
• Economics of accounting information
• Computer associates international
• Financial reporting for leases
• Lease contracts
• Lessee accounting
• International financial reporting
• Conceptual framework
• Financial position
• Interpreting financial statements
• Consolidated financial statements
• Financial statements comprises
• Corporate financial reporting
• Group financial statements
• Sustainability reporting
• Reporting through XBRL
• Government accounting in india
• Regulatory framework
• Contingent liabilities