Main context
Lease accounting is the process where the direct-financing lease along with the sales-type lease is being recognized in the market. The lease needs to be accounted for the development of the process within the process to perform the direct-financing lease for the firm (Acito, Hogan, and Mergenthaler, 2017). The lease accounting is also required to provide effective view on the agreement that has been formed for the accounting process (Ellwood, and Newberry, 2007). The primary purpose of the paper is to provide an effective view of the accounting for lease. For providing the clear view on the process two valuable article on the accounting for lease is being selected. These article help to understand the process and the need for accounting within the firm and also the value for the development of numerous actions in the field of the financial and economic condition. The paper also provides the view of the effective working process of the firm within the market.
Leases are generally known as the contracts or the agreements which the asset owners allow other people to use their property in exchange for other asset or money (Baudot, 2014). There is two type of lease that is a financial lease and the operating lease. In the financial lease, the risk along with the reward inherent are transferred to the lessee. On the other hand in the operating lease, the risk, as well as the reward inherent, are not being transferred. The accounting for lease generally depends on the terms as well as the condition for the lease (Jackling, Howieson, and Natoli, 2012). The article that is being selected for understanding the accounting for lease are the article by Ellwood and Newberry on public sector accrual accounting and the second one is by Jacobs and Jones on the legitimacy and parliamentary oversight in Australia. These articles provide the effective view of the accounting for lease within the country.
The articles provide the clear view on the accounting for lease within the country and the importance for the system in the accounting process. The article by Ellwood and Newberry clearly provides the view on the purpose to understand regarding the role of the public sector accrual or the agreement accounting for the implementation of the neoliberal form. The article eventually provides the view on the accounting process and provides the primary question regarding the activity of the agreement for the accountants (Ellwood, and Newberry, 2007). It is the primary process for the development of numerous activity within the field and also for the development of valuable accounting form in the market. Another article by Jacobs and Jones provides the primary purpose of the research is to provide an effective understanding of the accounting legitimacy along with the parliamentary activity in Australia. It is highly essential for understanding the need for appropriate accounting process within the field for the betterment of working function within the market (Jacobs, and Jones, 2009). It is the general fact where the accountant can effectively perform their activity in term of the lease with the help of proper legitimacy along with the parliamentary activity. The primary concern of the project is to deliver valuable and suitable concern for performing accounting for the leases process.
Similarities within both articles
The similarities within both the article are that both of them provide an effective view of the accounting process and also the need of accounting for the lease or the agreement. It can be seen from both the article that the government plays the vital role in the development of accounting in term of the lease within the field. This is the mere fact where the government performs their activity and the trade liberalisation process within the field. The process for the accounting for lease have a vital activity in the field of auditing and accounting for delivering the effective knowledge on the agreement process (Duff, 2017). The financial lease along with the operating lease is also proclaimed within the article for gathering the information regarding the working function of these process in the field. The accounting for leases directly implied action in the field of accounting and auditing.
The difference within both the article can be seen that there is a various gap within the finding of the process. The article by Ellwood and Newberry provides the view that the development of accrual accounting the government role of procurer gets reduced. In another article by Jacobs and Jones, it can be seen that the accounting generally focuses on the development process of a joint committee of the public accounts. Both the article has a different view on the accounting process for the lease to maintain the activity in the accounting field. In the case of the lease, it can be seen that accounting help to understand the facts and the business process to maintain the activity (Järvinen, 2016). The finding is also effective for maintaining the view of the development of valuable process to maintain their activity with the help of legitimate purpose. On the other hand, the article shows that neo-liberal principles are having the effective view within the field.
The accounting for lease has the major implication on the accountants of the Australian companies in various aspect. It can be seen that companies are generally associated with numerous leases or the agreement which needs effective accounting process for maintaining the system in the market. Accountant in this process help to develop the view and the various working function for the development of numerous documents regarding the cases (Hoitash, and Hoitash, 2017). The major implication that is being faced by the accountants in the field of accounting for leases is regarding the depreciation and the interest expense. Another implication for the accountants is the value that is being utilised for the future lease payment as the liability. This is the primary activity that needs to be performed by the accountants of the Australian companies to maintain the value of the firm. The agreement needs to be adjusted with effective accounting process to understand the expense along with the income and the liabilities that are associated with the company (Gimbar, Hansen, and Ozlanski, 2016). The implication clearly provides the effective development process for the firm.
Differences within both articles
The diagram clearly shows that the accountant of the companies needs to maintain the lease of the firm in the most valuable and effective way to maintain the expense within the market. It is the primary objective of the firm that needs to be implemented for the betterment of the rental activity and the agreement performed by the organisation (Robinson, Stomberg, and Towery, 2015). The diagram effectively provides the view on lease rental as well as the depreciation of the firm within the market. It can be seen that the entire working function is being developed for the value of the firm.
Accounting regulators provide the effective view of the development process of accounting within the field (Tan, and Low, 2017). Accounting for lease is the vital aspect for the accounting regulators and this has the huge implication on the process. The two major implication of the accounting regulator is the faithful presentation of the obligation arising from the leases or the agreements in the field. Another implication is the decreasing opportunity for the firm to framework the leasing transaction in the market. Both this effectively creates implication for the accounting process that is being formed in the accounting system.
The financial report is being used by the various stakeholder within the firm and it allows them to understand the business process and the development value of the firm within the market. The implication of the stakeholders regarding the accounting process within the firm to develop the accounting report for the firm (Abbott, and Tan?Kantor, 2018). The primary implication is on the year-end balance sheet of the firm along with the financial reporting for the firm. It allows the stakeholders to analyze the process and understand the financial as well as the economic condition of the firm in the market.
Conclusion
The paper eventually concludes the fact that the accounting for lease is the valuable process for developing the concept of financial and the economic value of the firm. The paper also concludes the facts that the accounting process for the lease affect the auditing and the financial activity of the firm within the market. The paper also concludes that the accounting process for the lease or the agreement has a great impact on the external stakeholders of the firm to maintain their working function in the market. It is one of the most effective and the valuable process for building the accounting report of the firm.
References
Abbott, M. and Tan?Kantor, A., 2018. Fair Value Measurement and Mandated Accounting Changes: The Case of the Victorian Rail Track Corporation. Australian Accounting Review, 28(2), pp.266-278.
Acito, A.A., Hogan, C.E. and Mergenthaler, R.D., 2017. The effects of PCAOB inspections on auditor-client relationships. The Accounting Review, 93(2), pp.1-35.
Baudot, L., 2014. GAAP convergence or convergence Gap: unfolding ten years of accounting change. Accounting, Auditing & Accountability Journal, 27(6), pp.956-994.
Duff, A., 2017. Social mobility and Fair Access to the accountancy profession in the UK: Evidence from Big Four and mid-tier firms. Accounting, Auditing & Accountability Journal, 30(5), pp.1082-1110.
Ellwood, S. and Newberry, S., 2007. Public sector accrual accounting: institutionalising neo-liberal principles?. Accounting, Auditing & Accountability Journal, 20(4), pp.549-573.
Gimbar, C., Hansen, B. and Ozlanski, M.E., 2016. The effects of critical audit matter paragraphs and accounting standard precision on auditor liability. The Accounting Review, 91(6), pp.1629-1646.
Hoitash, R. and Hoitash, U., 2017. Measuring accounting reporting complexity with XBRL. The Accounting Review, 93(1), pp.259-287.
Jackling, B., Howieson, B. and Natoli, R., 2012. Some implications of IFRS adoption for accounting education. Australian Accounting Review, 22(4), pp.331-340.
Jacobs, K. and Jones, K., 2009. Legitimacy and parliamentary oversight in Australia: The rise and fall of two public accounts committees. Accounting, Auditing & Accountability Journal, 22(1), pp.13-34.
Järvinen, J.T., 2016. Role of management accounting in applying new institutional logics: A comparative case study in the non-profit sector. Accounting, Auditing & Accountability Journal, 29(5), pp.861-886.
Robinson, L.A., Stomberg, B. and Towery, E.M., 2015. One size does not fit all: How the uniform rules of FIN 48 affect the relevance of income tax accounting. The Accounting Review, 91(4), pp.1195-1217.
Tan, B.S. and Low, K.Y., 2017. Bitcoin–its economics for financial reporting. Australian Accounting Review, 27(2), pp.220-227.
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