Problems on Accounting for leases

Problems with Accounting for leases

Generally, the controversy centers on whether it is right for a company that rents an asset to recognize that asset and the corresponding obligation to pay rents for the use of that asset on its balance sheet in a similar way to how it would account for an asset it purchased with borrowings.

These issues include the "substance over form" argument, the problem of asset, and liability, the definition for the purposes of inclusion in practical financial reporting, and the adequacy of disclosure in note form.

Accounting for leases can present several problems, including:

Classification of leases: Determining whether a lease is a capital lease or an operating lease can be challenging. Capital leases are treated as assets and liabilities on a company's balance sheet while operating leases are not.

Recognition of lease payments: Lease payments can be spread out over the life of the lease, making it difficult to determine the correct amount of rent expense to recognize in a given period.

Leasehold improvements: Accounting for leasehold improvements, or changes made to leased property by the tenant, can be tricky. These improvements may need to be depreciated over their useful life, separate from the lease itself.

Lease termination or renewal options: Determining the accounting for lease termination or renewal options, such as purchase options or renewal clauses, can also be difficult.

IFRS 16: International Financial Reporting Standards (IFRS) 16, introduced in 2016, changed how leases are recognized on the balance sheet. This standard requires lessees to recognize a right-of-use asset and a lease liability for all leases, except for short-term leases.

Disclosure: Companies must disclose the nature, terms, and conditions of leases in the financial statements in order to provide transparency and fairness to the users of the financial statements.

'Acharya Ramchandra Shukla' was born in 1884 in a village named Agona in Basti district, Uttar Pradesh, India. His father Pt. Chandrawali Shukla was a Sarayuparin Brahmin. He was a supervisor Kanungo and biased of Urdu. Shuklji had studied till the Intermediate. After this, he did the job. Then he left the job and became a teacher. He started writing in Hindi from his student life. Impressed by Shuklaji's ability, Nagari Pracharini Sabha, Kashi called him to work in the Hindi literature. Shuklaji was appointed Hindi teacher in Hindu University and later became the Head of Hindi Department. He died in 1941 AD. Following are the major compositions of Acharya Ramchandra Shukla- 'Charan Vinod', 'Radhakrishna Das', 'Chintamani Triveni', 'Surdas', 'Ras Mimamsa', 'History of Hindi literature' etc. He edited 'Bhramar Geetasar', 'Bharatendu Sahitya', 'Tulsi Granthavali' and 'Jayasi Granthavali'. The talent of Acharya Ramchandra Shukla Ji was multi-faceted. He was a great essayist, critic and thinker. He is considered the first basic critic of Hindi. His history of Hindi literature is considered to be superior in history. Acharya Ramchandra Shukla was the pride of Hindi. Full name of 'Dr. A.P.J. Abdul Kalam' was 'Dr. Avul Pakir Jainulabdeen Abdul Kalam'. He was born on October 15, 1931 at Dhanushkothi in the temple town Rameshwaram in Tamil Nadu. He was born in a poor family, but he was an exceptionally brilliant child. Kalam passed the B.Sc. examination from Saint Joseph College, Thiruchirapalli. He joined Madras Institute of Technology (MIT). His further knowledge in the field got upgraded when he joined Defense Research and Development Organization (DRDO) in 1958 and Indian Space Research Organization (ISRO) in 1963. He is known as the Missile Man of India. The various Indian Missiles of world order like Prithvi, Trishul, Akash, Agni, etc. are mainly the result of his efforts and caliber. Dr. A.P.J. Abdul Kalam became the 11th President of India. He served the country from 2002 to 2007. For his excellence and brilliance, he was awarded the prestigious Bharat Ratna in 1998; Padma Vibhushan in 1990; and Padma Bhushan in 1981. Dr Kalam expired on Monday 27 July 2015. He suddenly fell unconscious when he was delivering a lecture at the Indian Institute of Management at Shillong. On 30 July 2015, the former President was laid to rest at Rameswaram's Pei Karumbu Ground with full state honours. Over 350,000 people attended the last rites, including the Prime Minister, the governor of Tamil Nadu and the chief ministers of Karnataka, Kerala and Andhra Pradesh. Dr. A.P.J. Abdul Kalam was mainly interested in work. He was a bachelor. He was not interested in going abroad. He wanted to serve his motherland first. He said that he thinks his first and foremost duty is to serve his motherland. He was fond of music and the Koran and the Gita. Ever since becoming the head of the Indian State, he had been having interaction with children all over the country. He was by no means a miracle man. His advice to the youngster of the nation was to "dream dream and convert these into thoughts and later into actions".