Exposure draft on lease accounting was released in 2013 which proposed innovation goals to address the current lease accounting treatment of lease accounting issues raised. This report will analysis Qantas Issues that related to potential changes in relevant accounting standards. This report is composed of 3 parts which part 1 will be outline the ED/2013/6 leases requirements propose，part 2 will be compare significant different between the new standard and prior one to explain the reasons of IASB want propose a new accounting standard of leases. Part 3 will be analysis the future impact of Qantas by applying the requirement in ED/2013/6 leases.
Under normal circumstances, the proposed standard requires companies to recognize …show more content…
Financial lease requires companies start from begin to recognize the assets and liabilities on balance sheet, compare to the operating lease that requires the company only need record periodic lease payments rather than the lessor's obligation to recognize at the same time. therefore, under the this results in off-balance sheet accounts that company can be hiding their debt or liability into operating leases. In order to hiding company's debt and liability that may misleads investors and other users of financial statements. Proposed new lease accounting standard requires the company to recognize all leased assets and liabilities. As the PWC (2013) reports if increase IED (interest-earning-debt) by 58% on the balance sheet that in the average of retailer has significantly affected by increasing up to …show more content…
Qantas's EBITD will be decrease and leverage ratio will be increase.
2) From the draft of the proposed re-classification of the lease, the assets and liabilities in the balance sheet Qantas will increase dramatically, due to the off balance item that is expected to bring balance sheets under operating leases.
3) The current balance sheet according to the relevant provisions of the proposed operating leases will treat income statements in a different way.
4) Qantas wouldn't has significantly change of losser accounting by new standard.
Qantas is a major player in the Australian airline and airlines usually involves a large number of lease contracts in radically altered according to the accounting treatment. In view of this fact, we conclude that there is a great opportunity, Qantas's operating and financial statements need to be modified in the subsequent period greatly.
5) More judgment will be involved by determination of lease terms, and term could embrace more or less option period, which is determined by the nature of the assets, industry and the market in which Qantas