The Expected Impact And Strategy Of IFRS16 On Dongfang Airlines Co.,Ltd.

Lease is an important activity for obtaining finance.However,there are many defects in the current lease accounting standards.On the one hand,the rights and obligations produced in operating leases are not reflected in the tenant’s balance sheet,which makes operating leases an off-balance-sheet financing.On the other hand,the current guidelines for the classification of the operating lease and finance lease rely too much on distinct boundaries,which leads to different accounting treatment of the similar lease transactions and reduces the comparability of financial statements.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: IFRS 16 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.Now substantial convergence with the international accounting standards is the direction of accounting standards in our country.Since IFRS16 is 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 first points out the defects of the current lease accounting standards,and then gives a detailed analysis on the content of IFRS16 and its impact on business.On thisbasis,this paper analyzes the current situation of China’s financial leasing market,including the leasing industry and the aviation industry which will greatly affected by IFRS16,taking Dongfang Airlines Co.,Ltd.as an example.Through the comparison of the current lease accounting standards and the IFRS16 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.