Financial accounting and reporting

Document Type:Coursework

Subject Area:Accounting

Document 1

IAS 17 Leases address cause of balance sheet financing and organization secures privilege to use an asset for a period and payments made to lawful owner. IAS 17 requires that specific leases, entitled finance leases take after the substance over frame standard and are brought into statement of financial position where the asset and related debt obligation are recognized and payments included in accrual of profit and loss. The users with operating leases still need to make approximations for reporting of financial statement to know the company exposure to obligations. Finance lease is agreement that transfers all risks and rewards incidental to ownership to the lessee. The ownership price of the asset includes getting the profit from the value appreciated. Financial leases transfer the assets to the lessee for a specific part of asset service life and so identified if the lease payment is a minimum and fair value of the asset.

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