The expected impact of the implementation of International Financial Reporting Standard (IFRS) 16 – Leases

Segal, Milton; Naik, Genevieve

doi:10.4102/jef.v12i1.207

Cited by 8 publications

(4 citation statements)

References 38 publications

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“…Confirmation of the significant impact on the financial performance of operating lease capitalization companies and its benefits for management decisions has also been made by many other scholars (Natarajan & Kuniparambil, 2019;Aurora, 2020). ijmp.jor.br v. 12, n. 6, Special Edition ISE, S&P -November 2021ISSN: 2236-269X DOI: 10.14807/ijmp.v12i6.1762 A similar conclusion was reached by South African scholars (Segal & Naik, 2019), who based on information obtained in a public debate conducted jointly by the International Accounting Standards Board (IASB) and the South African Institute of Chartered Accountants (SAICA), confirmed that the application of IFRS 16 "Lease" lead to changes in the configuration of the balance sheet, and thus affects the liquidity and solvency of the enterprise.…”

Section: Literature Reviewsupporting

confidence: 69%

Problem aspects of application by state enterprises of international standards of accounting and reporting in rental operations

Rohoznyi

Parasiy-Vergunenko

Kutsyk

et al. 2021

Ind. Jour. Manag. & Prod.

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The purpose of the article is to determine the peculiarities of public sector enterprises' use of international and national accounting and financial reporting standards governing the accounting of lease transactions, study the impact of their provisions on financial reporting indicators, substantiation of the most acceptable lease accounting models for public sector enterprises. The information base of the empirical study was the data of the official website of the Ministry of Economic Development, Trade and Agriculture of Ukraine for 2013-2020. Methodical and methodological basis of accounting for lease transactions were the provisions of P (S) of Accounting 14, NP (S) of Accounting SS 126, IPSASB 13, IAS 17, IFRS 16. In the study used such techniques as comparison, l, time series, structural -dynamic and coefficient analysis. The essence of the concept of "lease" is clarified on the basis of a comparative analysis of its various definitions given in international, national standards of accounting and financial reporting for business entities, public sector entities, as well as in other regulations. The conceptual model of rent accounting for P (S) of Accounting 14, NP (S) of Accounting SS 126, IPSASB 13, IAS 17 and IFRS 16 is considered, the problematic aspects of its application in the accounting practice of domestic state enterprises are identified. Discussion issues concerning the application of the provisions of IAS 17 are highlighted, which include: the lack of a financial component in rental costs; lack of information in the financial statements about lease obligations not incurred by the company; Insufficient information in the financial statements about the existence of the asset to which the lessee has the right to use. The results of the study are to identify the key problems of the lease accounting model in accordance with IAS 17 for state-owned enterprises and make suggestions for their solution. Recommendations for assessing the impact of the lease accounting model in accordance with IFRS 16 on the financial statements of the lessee have been developed. The main directions of elimination of obstacles to the implementation of IFRS in the domestic accounting practice concerning the lease operations of state-owned enterprises are identified.

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Section: Literature Reviewsupporting

confidence: 69%

Problem aspects of application by state enterprises of international standards of accounting and reporting in rental operations

Rohoznyi

Parasiy-Vergunenko

Kutsyk

et al. 2021

Ind. Jour. Manag. & Prod.

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“…In the authors' view Segal and Naik (2019) although the difference in the classification of finance vs. operating leases was neither controversial nor ambiguous, the difference between accounting for operating vs. finance leases was significant and material.…”

Section: Introduce the Problemmentioning

confidence: 90%

IFRS 16 - Impact on the Assets of the Major Airlines Operating in Brazil

Tofanelo¹,

Nunes²,

Sales³

2021

IJEF

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The article aims to study the impacts that the adoption of IFRS 16 will have on the financial position, that is, what will be the impact on the total value of assets of airlines operating in the Brazilian market. It is evident that the new accounting of aircraft acquired through operating leases, an essential tool for any company in the sector, is fully in line with the essence of the operation. Therefore, the authors structured the methodology through a comparison of indicators between 3 companies in the Brazilian airline industry, together with data collection through accounting information obtained in explanatory notes on future payments of operating leases. The findings show that, with IFRS 16, there were significant changes in the indebtedness indicators of companies, due to the significant changes in the accounting of assets, affecting the capital structure and profitability of companies.

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“…Therefore, they outline the need for a strategy for companies to deal with the impacts arising from IFRS 16. Fundamentally, Segal and Naik (2019) identify the impact of implementing IFRS 16 for the South African context with six potential changes and implications. They identified the parties affected, from lenders, drafters, and analysts, and the sectors most commented on were banking and retail.…”

Section: Literature Reviewmentioning

confidence: 99%

“…The research identification of the loss of off-balance-sheet gains on operating leases highlights that those who rely on operating leases must consider the impact of lease capitalization by making adjustments to their business. Carrying lease payable on the balance sheet, which is likely to be experienced by a company that has traditionally held a large number of operating leases, could have a material impact on its financial statement ratios (Segal & Naik, 2019).…”

Section: Literature Reviewmentioning

confidence: 99%

Income Tax and VAT Issues Concerning Lease after IFRS 16 Convergence in Indonesia

Saptono

Khozen

2021

The Indonesian Journal of Accounting Research

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This study analyzes income tax and value-added tax (VAT) issues on lease transactions after IFRS 16 convergence in Indonesia into PSAK 73. The data collection is through in-depth interviews and literature review. We interviewed informants selected purposively. We also used secondary data from literature studies to enrich the analysis. This study concludes that the tax authorities need to make tax policies that can provide legal certainty. The new tax regulation needs to accommodate a more precise direction of the policy. Among the three available options, this study favors realization taxation as a more appropriate option for Indonesia's current situation, other than mark-to-market or hybrid taxation. To narrow the practical gap between accounting and tax, this study recommends that tax authorities initiate a discussion with relevant stakeholders to prevent potential tax disputes in the coming years. Tax authorities need to notice some issues with withholding tax when the lessee records interest expenses as well as transfer/delivery issues causing VAT payable when the lessee recognizes a right-of-use asset.

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The expected impact of the implementation of International Financial Reporting Standard (IFRS) 16 – Leases

Cited by 8 publications

References 38 publications

Problem aspects of application by state enterprises of international standards of accounting and reporting in rental operations

Problem aspects of application by state enterprises of international standards of accounting and reporting in rental operations

IFRS 16 - Impact on the Assets of the Major Airlines Operating in Brazil

Income Tax and VAT Issues Concerning Lease after IFRS 16 Convergence in Indonesia

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