Many companies use leases to acquire higher priced assets. Leasing is an important activity for many entities. Presently some leases are capitalized, and some are treated as operating leases. Opponents of this method criticize the accounting treatment because the present models do not meet the needs of users of financial statements; they do not always provide a faithful representation of leasing transactions. One reason is that operating leases are not capitalized. The International Accounting Board has issued a Proposed Accounting Standards Update (Revised) (Links to an external site.) (Topic 842) which proposes significate changes to lease accounting.
Write a five- to seven-page paper, formatted according to APA style as outlined in the Ashford Writing Center (Links to an external site.). Your paper should cite five of the research links below and include an in-text citation, and a quote from the article. Section heading titles should be centered and in bold.
The links below may be used for your research. If you would like to curate your own resources, you may do so.
In your paper,
- Identify the present rules for evaluating a lease and whether it is capitalized or not.
- Summarize the new lease accounting rules.
- Distinguish the effect these new rules have on the balance sheet, income statement, and cash flow statement.
- Differentiate what industries would be affected more than others.
- Compare the proposed new Type A and B leases.
- Summarize the effects the Proposed Lease Standards would have on the following: presentation on the financial statements; how assets and liabilities would be computed; the effect to lease expense due to “front-loading;” interest charges; year-end reporting; financial disclosure notes; and income taxes.
- Interpret the present rules for evaluating a lease and whether it is capitalized or not.
Include an introduction and a conclusion in your evaluation.
The Leasing Final Paper
- Must be five to seven double-spaced pages in length (not including title and references pages) and formatted according to APA style as outlined in the Ashford Writing Center’s APA Style (Links to an external site.)
- Must include a separate title page with the following:
- Title of paper
- Student’s name
- Course name and number
- Instructor’s name
- Date submitted