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How Do Lessee Reports Cheats Affect The Financial Lease

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The impact of proposed changes on the financial statement is changes on how the lessee reports leases that currently categorised as operating leases. All the lease for more than 12 months, the proposal will require lessee to recognise assets and liability. There are also have some change in lessee report lease currently categorised to finance lease. This proposed requirements will have an effect in financial statements for lessee. (Snapshot, 2013) Opinion for this is although have effect in financial statement for lessee but it can show a proper financial statement to user. Recommendation is after make a lease agreement should record all the transaction no matter is how long the lease term so that will no lost the information.

After revised on lessor accounting the approach will incorrectly inflate lessor balance sheet. When lessor transferred the significant risks or benefits associated with the underlying asset to lessee, Lessor does not derecognise relevant portion of the underlying asset but lessee recognises a right …show more content…

This is because a lessee will be required to recognise a right-of-use asset and liability for all leases more than 12 months. Information about lease liabilities has predictive value and provides information about minimum future cash outflows in relation to leases. Although the disclosure for future lease payments required by leasing has analytical value but the information is not useful as the information provide under the proposals because is showing an undiscounted basis. (Snapshot, 2013) Opinion for this is after revised leasing, in financial report can let user more understand information but they also need to determine the information is true or not. Recommendation is they need to recognise a true and fair information to user so that will not make a wrong decision in

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