International Accounting Standards: The International Financial Reporting Standards

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Recommended: Formation, composition and the responsibility of international accounting standards

It is a known fact that the differences in culture, language, religion, education, ideology and politics around the world necessitate the variety of accounting rules and standards. However, it is imperative that a single set of standards for the reporting of financial statements should be in place. Admittedly, with the significant growth of the cross-border business and trade, if the companies are equipped with a set of high-quality accounting standards they will not only improve financial reporting across the globe but also will be able to enhance the consistency, comparability, and efficiency of their financial statements. These essential needs gave birth to IFRS.
The International Financial Reporting Standards (IFRSs) are developed by The …show more content…

Leases for all assets are the primary scope of IFRS 16, with certain exceptions. “A lease is defined as a contract, or part of a contract, that conveys the right to use an asset (the underlying asset) for a period of time in exchange for consideration” (EY, 2014).
For annual reporting periods beginning on or after January 1, 2019, the lessees are required to account for all leases under a single on-balance with two recognition exemptions for lessees; leases of ’low-value’ assets and short-term leases. At the beginning of a lease, the lessees will also be required to recognize a lease liability for lease payments and an asset to represent the right to use the underlying asset during the lease term (i.e., the right-of-use asset). The interest expense on the lease liability and the depreciation expense on the right-of-use asset will be recognized separately. The lease liability will be remeasured for certain events, such as a change in lease term, and the re-measurement of the lease liability will be recognized as an adjustment to the right-of-use asset. The classification of all the leases as operating and finance leases will be the same as IAS 17 however the proposed requirements would supersede IAS 17 (IFRS,

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