StudentShare solutions
Triangle menu

Arguments for and against capitalization of all leases - Essay Example

Nobody downloaded yet

Extract of sample
Arguments for and against capitalization of all leases

International Accounting Standards no. 17 states that a lease may qualify either as a capital lease or operating lease (http://www.ifrsclass.com/gaap/ias/ias-17.htm). Under capital lease, all the risks and rewards are transferred to the lessee. To resolve the differences between the two international accounting standards, both accounting boards agreed to meet to come up with a common stand on capital lease accounting scheduled in 2011. (Kirk 2005; 85). The proposal to capitalize all leases should not be implemented.
The proposal to implement the capitalization of all leases should not be implemented. Capitalization entails ownership. Capitalization means that the company has to depreciation the assets. Thus, it would be illogical to implement the proposal to capitalize all leases. The new proposal states that operating leases should be capitalized. Under the current accounting environment, there are minimum guidelines to be followed before a lease is capitalized. A lease that does not qualify as capital lease is recorded as an operating lease. This is illogical because the lessee is just renting (borrowing) the premises and is not buying.
Under the capital lease, the lessee can include the capital lease asset as part of one’s total assets. This will create a better financial picture of the company when compared to not having the leased property capitalized. Second, the company can use the capitalized assets as collateral for the processing of the company’s new long term loans. The banks will scrutinize the financial statements to determine if there are enough assets to cover for possible nonpayment of loans or other payables (Elliot & Elliot). This would be illogical because the company does not own the building or facilities rented.
Further, the lessee becomes the owner of the property after fulfilling the requirements set forth under International ...Show more

Summary

There is a current proposal of the International Accounting Standards Board to capitalize both finance and operating leases based on the Statements of Financial Position or Balance Sheets proposal. The…
Author : gladycetowne
Arguments for and against capitalization of all leases essay example
Read Text Preview
Save Your Time for More Important Things
Let us write or edit the essay on your topic
"Arguments for and against capitalization of all leases"
with a personal 20% discount.
Grab the best paper

Check these samples - they also fit your topic

Arguments against Solar Energy
Solar energy is harnessed light and, heat from the sun converted in electricity. It has a wide range of uses e.g. heating of water, producing electricity, heating and lighting in buildings, industrial and commercial uses etc. in lighting it is used for various uses e.g.
5 pages (1250 words) Essay
Arguments for and against Abortion
Arguments for and against Abortion Part 1: The issue of abortion has been controversial for a long time. While some people argue that it is acceptable, others argue that it is wrong. Mary Anne Warren argues that abortion is not wrong. In support of her argument, she presents the following facts: According to Mary Anne Warren, abortion is not wrong because; removing a fetus from a mother’s womb is not taking away the life of a human being (Ford, 2002).
2 pages (500 words) Essay
Arguments for and against abortion
Abortion The question of abortion has raised many an eyebrow in relation to whether or not it is right, where the issue still remains undecided. As a result, it is important to look at the arguments that go for and against the justification of abortion in modern and conventional society.
2 pages (500 words) Essay
Arguments against abortion
Abortion Generally, human pregnancy has been divided into three trimesters, each lasting three months. Issues such as miscarriage, preterm birth and genetic abnormality and trauma could cause the termination of pregnancy. The debate on abortion, however, has been on the induced abortion, carried out at any gestational stage for a given purpose.
3 pages (750 words) Essay
Arguments against abortion
It has aggravated the derogation of the father's role in an increasingly fatherless society. It has portrayed the greatest of gifts -- a child -- as a competitor, an intrusion, and an inconvenience. It has nominally accorded mothers unfettered dominion over the independent lives of their physically dependent sons and daughters" And, in granting this unconscionable power, it has exposed many women to unjust and selfish demands from their husbands or other sexual partners.
10 pages (2500 words) Essay
Accounting for leases is problematic and the current standard (IAS 17) does not always reflect the substance of transactions
The leasing industry has become a major player in the business world and is responsible for billions of dollars worth of transactions. Leasing
6 pages (1500 words) Essay
Week Three Team Assignment
13 criteria for a capital lease. SFAS No. 13 established four criteria to differentiate between capital leases and operating leases. If any of the four criteria under SFAS No. 13 are not met then the lease fails to qualify to be registered as a
4 pages (1000 words) Essay
Leases
However, the main objective of the paper is to explain what happens to the property, if happened that the person who leased the office died during the lease period. The lease of a real property is terminable at the inclinations
1 pages (250 words) Essay
Arguments against the existence of God
Arguments for the existence of God have been proposed by popular philosophers such as Plato and Aristotle, Descartes who claimed that the existence of a benevolent God was needed to give meaning to senses, Immanuel Kant who in turn claimed that God’s
3 pages (750 words) Essay
Leases
Under the finance lease, all the risks and rewards that come with ownership are transferable to the lessee. To the lessee, it forms both an asset and liability while to the lessor it is a receivable. On the other hand, operating leases form an expense to the
5 pages (1250 words) Essay
Hire a pro to write
a paper under your requirements!
Win a special DISCOUNT!
Put in your e-mail and click the button with your lucky finger
Your email
YOUR PRIZE:
Apply my DISCOUNT
Comments (0)
Click to create a comment