Outline the main changes to the leasing standard. Discuss how the changes affect the accounting of leases of your chosen company (analyse the accounting policy on leases in the notes to the financial reports)

Assessment Task

The AASB recently released a new accounting standard on leases, AASB 16.  It applies to annual periods beginning on or after 1 January 2019.  Therefore, it is applicable to financial reports with a financial year end date of 31 December 2019 or later. It applies to financial reports prepared on 30 June 2020 for most Australian companies. 

This new standard is controversial because it presents a single model for lease accounting. Research estimates that complying with the new standard will increase liabilities by $100 billion for the top 100 companies in Australia in 2020. The impact on companies including Woolworths, Wesfarmers, Ramsay Health, Commonwealth Bank of Australia and Telstra will be significant as they have $54.5 billion of operating leases between them. In the group, conduct research on the new leasing standard and its impact on one ASX listed company from the following list:

1. Woolworths Group
2. Wesfarmers Ltd
3. Commonwealth Bank of Australia
4. Qantas Airways Ltd
5. BHP Group Limited

Outline the main changes to the leasing standard. Discuss how the changes affect the accounting of leases of your chosen company (analyse the accounting policy on leases in the notes to the financial reports). Calculate, compare and discuss the changes for your chosen company on:

1. The balance sheet, 
2. Income statement and 
3. Cash flow statement

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