CHAPTER TWO
International Accounting Standards (IAS)
As the economy is booming globally, the activities of the business organization also increase. When business activities increase on a global scale, people began to draw more attention to what the businesses are about and tend to have an interest in the organization that runs the particular business of their interest. As a result, the demand for financial information increases as managers, lenders, shareholders, investors, the public, and other interested users need consistent, comparable, reliable, and transparent information to make business decisions. In order for the organization to provide financial information that is expected of by interested users, it needs set standards to guide it …show more content…
In fact, the idea to converge the accounting standards started in response to the post - World War II economic integration with related increases in cross-border capital (Investopedia, 2016). Eventually, the development of a unified set of high quality, international accounting standards was used in all major capital markets and elsewhere.
Definition and Purpose of International Accounting Standards (IAS)
In 1973, an international body called the International Accounting Standards Committee (IASC) was established to write accounting standards for international use (Kivumbi, 2010). From there IASC released a series of standards which was known as the International Accounting Standards.
The IAS was, as mentioned, a set of standards that were created and issued by the IASC since 1973. From there until 2000, the IASC issued the International Accounting Standards starting from IAS 1 to IAS 41 which was used by companies in countries that have accepted those standards. In 2001, the IASC was reorganized and became an independent international standard setter known as the International Accounting Standards Board (IASB), and created the International Financial Reporting Standards (IFRS). However, many countries require public-traded companies to prepare their financial statements in conformity with the International Accounting …show more content…
The article also discusses the issues companies will encounter if operating leases are to be recorded on the balance sheet. Therefore, the article simply relates to IAS 17/AASB 117 Leases.
IAS 17 defines a Lease as: an agreement whereby the lessor conveys to the lessee in return for a payment or series of payments the right to use an asset for an agreed period of time (Leo, Hoggett, & Sweeting, 2012).
To prescribe the appropriate accounting policies and disclosure to apply in relation to leases’ is the objective of IAS 17 for lessees and lessors (International Accounting Standards 17 Leases, 2010) . The two parties to a lease: lessor and lessee, are required to classify a lease as either an operating or a finance lease.
A finance lease is defined in paragraph 4 of the standard (IAS 17) as: a lease that transfers substantially all the risks and rewards incidental to ownership of an asset. The title may or may not eventually be
International Accounting Standards (IAS)
As the economy is booming globally, the activities of the business organization also increase. When business activities increase on a global scale, people began to draw more attention to what the businesses are about and tend to have an interest in the organization that runs the particular business of their interest. As a result, the demand for financial information increases as managers, lenders, shareholders, investors, the public, and other interested users need consistent, comparable, reliable, and transparent information to make business decisions. In order for the organization to provide financial information that is expected of by interested users, it needs set standards to guide it …show more content…
In fact, the idea to converge the accounting standards started in response to the post - World War II economic integration with related increases in cross-border capital (Investopedia, 2016). Eventually, the development of a unified set of high quality, international accounting standards was used in all major capital markets and elsewhere.
Definition and Purpose of International Accounting Standards (IAS)
In 1973, an international body called the International Accounting Standards Committee (IASC) was established to write accounting standards for international use (Kivumbi, 2010). From there IASC released a series of standards which was known as the International Accounting Standards.
The IAS was, as mentioned, a set of standards that were created and issued by the IASC since 1973. From there until 2000, the IASC issued the International Accounting Standards starting from IAS 1 to IAS 41 which was used by companies in countries that have accepted those standards. In 2001, the IASC was reorganized and became an independent international standard setter known as the International Accounting Standards Board (IASB), and created the International Financial Reporting Standards (IFRS). However, many countries require public-traded companies to prepare their financial statements in conformity with the International Accounting …show more content…
The article also discusses the issues companies will encounter if operating leases are to be recorded on the balance sheet. Therefore, the article simply relates to IAS 17/AASB 117 Leases.
IAS 17 defines a Lease as: an agreement whereby the lessor conveys to the lessee in return for a payment or series of payments the right to use an asset for an agreed period of time (Leo, Hoggett, & Sweeting, 2012).
To prescribe the appropriate accounting policies and disclosure to apply in relation to leases’ is the objective of IAS 17 for lessees and lessors (International Accounting Standards 17 Leases, 2010) . The two parties to a lease: lessor and lessee, are required to classify a lease as either an operating or a finance lease.
A finance lease is defined in paragraph 4 of the standard (IAS 17) as: a lease that transfers substantially all the risks and rewards incidental to ownership of an asset. The title may or may not eventually be