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Exposure Draft ED/2013/6 'Leases' and its impact on the financial position and performance of companies
Finance & Accounting
Pages 8 (2008 words)
Exposure Draft ED/2013/6 'Leases' and its impact on the financial position and performance of companies Executive Summary The revised exposure draft has made some radical changes in the accounting rules related to lease. This has created mass criticism among many experts.
They are highly dependent on lease. The revised Exposure Draft will increase the income expense of the organization, which in turn will lead to an increase in the debt. As the total lease expense will increase, so the organization has been recommended to reconsider any plans related to entering into new lease areas. Apart from this, the future cash flows are also required to be reassessed. Table of Contents Introduction 4 Lease Contacts by Delta Airlines 5 The revised Exposure Draft 6 The Implications 8 Conclusion 9 Reference List 11 Appendix 12 Introduction 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. ...
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