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'Leases' and its impact on the financial position and performance of companies - Essay Example
The revised exposure draft has made some radical changes in the accounting rules related to lease. This has created mass criticism among many experts. This study highlights on the changes that will be incorporated in the income statement and the balance sheet of the lessee. …
Exposure Draft ED/2013/6 'Leases' and its impact on the financial position and performance of companies
Financial accounting Standards Board (FASB) and International Accounting Standards Board (IASB) has revised the Exposure Draft that outlined some proposed changes in the accounting rules for leases. The reason behind such a proposal is just to improve the comparability and quality of financial reporting, by increasing the transparency related to leverage. This signifies the use of assets in the organization in its day to day operations and the exposure to risk by entering into a lease contact. The Exposure Draft has proposed a dual approach through which identification, measurement and presentation of the cash flows and the expenses related to lease can be made. Apart from this, the board has proposed some disclosure that would facilitate the investors and other users of the financial information to understand the uncertainty of cash flow, amount and timing arising from leasing (IFRS Foundation, 2013a). This study focuses on the impact of new revised accounting standards that are framed for leases, on the financial performance and position of the organization.
Delta Airlines is a major airline, which is operating in America. It is headquartered at Atlanta, Georgia. It has an extensive network serving both domestic and international location in almost every continent except Antarctica. The organization along with its subsidiaries is operating with more than 5000 flights everyday and has approximate employee strength of about 80,000. ...