"ACCOUNTANCY7the lease would be reported in the balance sheet. The liability of the lease would beequal to the present values of all the lease payments. Any right to use the asset shallbe based upon the liability which is subject to many of the adjustments such as for theinitial direct costs.? For the purposes of income statements, the FASB has pronounced a dual model thatrequires the lease to be classified as wither an operating or a finance lease. Theoperating lease would lead to the expense on straight line basis whereas the financelease would lead to a front loaded expense pattern. This classification depends uponthe criteria which is somewhat same as the ones that have been applied in the currentaccounting for leases. It would be better to consider the different %ages when itcomes to determining the classification of lease.? Lease accounting would require the use of some significant judgement which includesthe estimations related with the term of the lease, payments pertaining to the lease andthe discount rate. The lease term will go onto include non-cancellable term plus therenewable periods that are expected to be exercised by the lessee or that are within thecontrol of the lesser. This will also include the option to terminate the lease that thelessee will not be able to exercise.? There are rent payments that are not taken into account when it comes to theassessment of the classifications and when it comes to measurement of the liability oflease but except the ones that are based upon the index or the rate. This is included onthe index or the rate as at the commencement of the lease. There have bene many ofthe changes to this index or the rate and the other such expenses that are variable innature would require treated in the manner in which the contingent rent is beingtreated today. ACCOUNTANCY8? An appropriate discount rate shall be applied when there would be a calculation of thepresent values.? All the lessees would require the monitoring of the occurrence of the triggering eventson some on-going basis.? There shall be no modification in the lease unless and until the lease has benemodified and the modification has not been modified for the lease which is separate.For the majority of the companies, the new standard shall call for many changes as onthe date of adoption. The companies that are engaged in the international operationswould be considering the impact of the new lease standard under IFRS. There aremany of the changes between the US GAAP and the standards of IFRS. This ismainly because IFRS needs a single model in which all of the leases shall be treatedas financing transactions.The directors and the employees that prepare the financial statements are the ones thathave to understand these change and also the concept of materiality in the financialstatements. Hence, one of the above updates were issued so that the company couldget more clarity in basics that are to be used when it comes to applying theseprinciples in the real preparation of the financial statements.ACCOUNTANCY9Answer 2:The ASIC had recently issued a notification that all the assets and the liabilities be reported attheir fair values and these be reported in the financial statements.In developing Standards, the IASB seeks to identify the information that isexpected to meetthe needs of a broad range of primary users, for a wide varietyof entities. Consequently, whenmanagement considers what informationshould be provided in the financial statements, therequirements in IFRS shouldprovide the basis for that assessment. The requirements withinIFRS have beendeveloped by the IASB taking into consideration the balance betweenthebenefits of providing information to users of the financial statements and thecosts ofcomplying with those requirements. Consequently, the cost of applyingthe requirements inIFRS is not a factor for management to consider whenassessing whether information ismaterial. However, it is not sufficient to applythe presentation and disclosure requirements ina Standard mechanically,without considering the entity’s specific circumstances, whether theentity’sprimary users have any special needs and whether the information providedmeets or exceeds the needs of an entity’s primary users. Therefore, there have been issues related with the way some of the items have to be reportedin the statement of cash flows. Hence, there was a notification issued which stated thefollowing:As perFASB website, there has been an update on the statement of cash flows which is thetopic number 230 and which relates with the classification of some of the receipts and cashpayments which is the consensus of the merging issues related with the task force.The effective date of the stated update for the public entities for all the fiscal years beginsafter December 15, 2017 and for all the interim periods within those fiscal year. For all of theother entities, these are the amendments that have been effective after December 15, 2019. "