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Accounting for Liabilities IAS 17 is the accounting standard dealing with measurement and disclosure of leases. It distinguishes between finance and operating leases, based on the transfer of risks and rewards associated with ownership.
In 2013, the IASB issued an Exposure Draft, which proposed a change in accounting for leases. The Exposure Draft does NOT distinguish between finance and operating leases. Instead Sections 28 to 35 of the Exposure Draft specify two types of leases based on the nature of a leased item. These sections also prescribe a few supplementary tests which may affect the classification of a particular lease.
Required
a) With reference to the Exposure Draft, compare and contrast the accounting treatment for Type A leases and Type B leases
b) Discuss whether you support the classification under IAS 17 or the proposed classification in the Exposure Draft.
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