Research On Lease Accounting Standards

The development of economic business requires better accounting standards. Meanwhile, improved accounting standards can promote the economy boom. Since this new century, the leasing industry has been rising and developing rapidly, which demands for perfect lease accounting standards. However, the current lease rules are increasingly criticized for resulting in the off-balance-sheet financing problem, especially in recent years. Accordingly, in July2006, the International Accounting Standards Board (IASB) and the US Financial Accounting Standards Board (FASB) initiated a joint project to develop a new approach to lease accounting that would require assets and liabilities arising from leases to be recognized in the statement of financial position. The boards issued their Discussion Paper Leases:Preliminary Views in March2009and initial Exposure Draft Leases in August2010. Because of the restriction of various factors, the plan of releasing formal international lease accounting standards didn’t work out. In last May, the IASB and the FASB have jointly developed a revised draft Standard on leases. The boards developed the proposals in this revised Exposure Draft after considering the responses to the initial ED. Restarting the joint project made the reform of lease accounting standards becoming a hot topic in the accounting field again.There are many disadvantages associated with the existing lease accounting. The IASB and the FASB have done a lot of research work to design an appropriate lease accounting model that can improve the current standards. However, the proposals in both initial Exposure Draft and revised Exposure Draft don’t get general support. Many institutions and individuals pointed out new problems in their feedback. We hope the new lease accounting standards can meet the needs of users of financial statements and be consistent with the new conceptual framework as well. How can this objective be achieved is a fundamental but difficult question. We may end without finding the answer. The boards should consider all the various comments, seeking for the best balance point based on the cost-benefit principle. The current Chinese lease accounting standards (CAS21) has already substantially converged with the international lease accounting standards (e.g. IAS17, FAS13). Furthermore, CAS21will be revised according to the international standard reform. Therefore, the amendment of lease accounting is having a significant impact on Chinese accounting standards and rental business. This paper studies on lease accounting standards and related issues, attempting to make some useful suggestions on the revise of lease accounting standards at home and abroad.This paper consists of five parts. The first chapter briefly introduces the research background, domestic and international relevant literature review, etc. The second chapter is the existing lease accounting standards that mainly elaborates and compares IAS17and CAS21, as the background knowledge of later discussion. The third chapter is the reform of lease accounting standards. In this part, the article comments on the existing standards, points out standard defects and explains the revise objective. Then, it demonstrates the lease accounting standard’s formulation process and reform progress. The fourth chapter is the content and analysis of Exposure Draft Leases. Firstly, the paper introduces the initial Exposure Draft’s important provisions and studies on it. Secondly, the paper introduces the revised Exposure Draft’s important provisions and studies on it. Finally, the paper analyzes the difference between the two versions of ED. Based on the previous discussion and analysis, the fifth chapter provides the improvement suggestions for lease accounting standards. Then, combined with Chinese actual situation, the paper puts forward the Do’s and Don’ts about the reform of the lease accounting standards in China. After that, the conclusion is summarized.