New International Leasing Criteria And Its Impact On China 's Lease Market

Lease is an important way of access to assets for the enterprises. However, due to its limitations that could be exploited to off-balance sheet financing behavior, the current lease accounting standards has been criticized by many investors,which is more obvious after the global financial crisis in 2008. In 2006 IASB and FASB initiated a joint project to develop a new approach to lease accounting. In 2010 and 2013 IASB and FASB released the Exposure Draft, for consulting views of lease accounting standards, which eventually was official released in 2016. The new lease accounting standards has two versions: IFRS16 released by IASB and ASC 842 released by FASB. IFRS 16 and ASC 842 are different in many ways, but both use the right-of-asset model that requires a lessee to recognize assets and liabilities for the rights and obligations created by leases. This will reduce the possibility of off-balance sheet financing through operating leases which ensure that lessees and lessors provide relevant information in a manner that faithfully represents those transactions.Although the formation of the rental market in china is in the late 1980 s, after thirty years of development, the areas involved in the leasing business become more and more widely. Lease has become one of the main means of financing in aviation, medicine,infrastructure which is closely related to the national economy, etc. At the same time,China’s leasing companies actively participate in international business. Now substantial convergence with the international accounting standards is the direction of accounting standards in our country. The China’s accounting standards agency need to consider how to make accounting standards in line with China’s national conditions and reflect the economic substance of lease accurately so as to promote the healthy development of the leasing industry. Since IFRS 16 and ASC 842 are beginning to take effect in January 1,2019, China’s leasing industry and the accounting standard agency will face the impact of this accounting standard for lease.This paper gives a detailed analysis on the content of IFRS 16 and its impact on business. On this basis, this paper analyzes the current situation and characteristics of China’s financial leasing market, including the leasing industry and the aviation industry which will greatly affected by IFRS 16, taking Bohai Financial Investment Holding Co.,Ltd. and Hainan Airlines Co., Ltd. as an example. Through the comparison of the currentlease accounting standards and the IFRS 16 on the recognition, measurement, presentation and disclosure of leases, this paper directly reflects the impact of the new international lease accounting standard on the leasing market and the relevant industries. At the end of the paper, some suggestions are put forward on how to deal with new international accounting standards.