Finance Accounting

This task requires you to prepare a report to evaluate and comment on information regarding leases provided in the annual report of a company listed on the Australian Stock Exchange (ASX). Your comments or evaluation should comply with the requirements of relevant Australian accounting standards (AASBs).

AASB 16 Leases was released in February 2016 in Australia. In this report, you should address the points outlined below:

Part A

1) Discuss the recognition criteria for a lease according to relevant AASBs.

2) Identify the differences between finance lease and operating lease.

3) Identify at least one example of a finance lease and an operating lease reported in the annual report of the chosen company.

Part B

From the perspective of the lessees, discuss the potential implication of the adoption of new AASB 16 Leases on assets, liabilities and debts, leverage, accounting-based debt covenants, expenses and profit of the chosen company. You should include the examples that you identified in part A3) in your discussion.