Research On The Expected Effects Of The Convergence Of Lease Accounting Standards

Global rental industry has been developing rapidly in recent years and playing an increasingly important role in the Economic Society. With the rapid development of the global leasing industry, issues in the implementation process of the current lease accounting standards are also increasingly prominent. The diversification of leasing business requirements the definition of lease should be more clearly; And to ease the problem of the existing lease accounting for operating leases in the financial statements of lessees, lease classification should also be adjusted. Accordingly, the accounting models of lessee and lessor should also be amended. The existence of this series of questions promotes a comprehensive revision of the existing lease accounting standards. In view of this, the International Accounting Standards Board (IASB) and the U.S. Financial Accounting Standards Board (FASB) established the International Working Group in2006. The working group has been made a series of efforts.In March2009, the Boards issued a Discussion Paper entitled "Leases:Preliminary Views". In addition, the Boards have released two lease drafts In2010and2013respectively. However, in the "Leases:Preliminary Views", the Boards deferred any consideration of changes to lessor accounting because most of the problems associated with existing lease accounting relate to the accounting for operating leases in the financial statements of lessees. Up to now, the amendment of two aspects of lease accounting standards:lessee and lessor, has been simultaneous, and has made some preliminary results. Given China’s substantial convergence with international accounting standards, the amendment and implementation of new international accounting standards is bound to affect Chinese rental industry.This study based on Chinese institutional background, with the perspective of the lessor, focus on the lease definition, classification of leases and lessor accounting. This study has analyzed the logic of evolution of lessor accounting, and has given a case study to analyze the effects the application of different models may arise in aspects of leasing business accounting, financial reporting, and the quality of presentation and disclosure of accounting information. Farther more, this study research the difficulty of lease accounting standards’international convergence in aspects of entity, standard setters and other aspects, attempt to propose some recommendations correspondingly.The main contribution of this paper lies in the following two aspects:Firstly, many scholars have systematically studied the expected effects of the amendments of lease accounting standards, but these researches are concentrated in the lessee field. This article reveals the expected effects of the amendments of lease accounting standards on the perspective of lessor. Secondly, this study focuses on the analysis of the logic of lessor accounting evolution, and researches the difficulty of lease accounting standards’international convergence in aspects of entity, standard setters and others, and puts forward the proposal correspondingly.The flaw of this paper is lack of empirical study about the expected effects of the convergence of lease accounting standards. This is mainly due to the inadequate of financial data. On the other hand, the new lease accounting standards are still in the consultation stage, and have no feasible conditions to analyze the expected effects of the convergence of lease accounting standards in empirical aspect. The author wants to be able to obtain sufficient data in the follow-up study to explore the expected effects of the convergence of lease accounting standards.