International Lease Accounting Standards Reform And Its Influence

Accounting is the product of economical development.With the development of lease industry, lease accounting has attracted more and more attention.IAS17divides leasing into two types:operating leasing and financial leasing, according to the risk and reward related to leasing property whether all transfer to lessee. In financial leasing, the ownership of the lease property involved will transfer from lesser to lessee. And the leasing property will be disclosed in the lessee’s balance sheet. In operating leasing, the ownership of lease property won’t be transferred. So the lessee needs not to disclose the involved assets and liabilities in their balance sheet, they can disclose the amount of operating leasing in the notes. Payments made under operating leases are charged to the income statement on a straight-line basis over the period of the lease. The accounting model leave a space for off-balance-sheet financing, which pose a serious threat to the quality of accounting information and reusability of financial reporting. Based on the enormous negative impact of off-balance-sheet financing, the International Accounting Standards Board have a plan to make a significant reform in lease accounting standards, in order to limit the scale of the off-balance sheet financing, and to enhance the accounting information quality.The exposure draft was issued in2010by IASB. The programs of reform will have a significant impact to leasing industry. In the exposure draft, IASB will combine the two types of leasing into one (DP Model). In this accounting model, a lessee should recognize a right-to-use asset and a liability to make lease payments. In this way, the off-balance-sheet assets will be transferred to lessee’s current balance sheet, the accounting information will be more reliable, the value of the statement will be added.If we accept the DP model recently, it will have a negative impact to our country’leasing industry right now, but positive influence will appear in long time. This dissertation will analysis the impact from the financial report, the quality of accounting information, the operation of the lease, regulatory authorities, practitioners and other aspects. Finally, I will summarize the above aspects, and make recommendations for solutions to dealing with the problems.