As a new accounting graduate you have recently joined the accounting department of an ASX listed company. To complete this assignment, you will need to select a suitable company yourself that meets the following criteria: The company must be a constituent of the S&P/ASX 300 index (www.asx300list.com); The company cannot be in the Financial sector; The company must publish audited annual financial reports in English, fully complying with IFRS or AASB standards; The company must have a 30 June year end. The Chief Financial Officer (CFO) approaches you with your first task. One of his responsibilities is to monitor the development of new and revised accounting standards in order to be aware of potential impacts on the company as early as possible. One of the major issues facing your company is the changes to AASB 117 Leases and the transition to AASB 16 Leases from 1 January 2019. The CFO has been researching on this and has studied the press releases issued by AASB in the past regarding this and has been comparing the changes between the two standards. Since your company have many leases agreements, he is highly concerned about the impacts the new accounting standard for leases could have on the company's financial position and performance. You have been asked to undertake some research and prepare a report for presentation at the next board meeting, to be held on 8 November 2018. Your report must address each of the following: a. a description of leases your company (as the lessee) currently has and how they are recognised, classified and presented in the latest annual report of your company according to AASB 117 or IAS 17 and a summary of the new rules according to AASB 16 Leases or IFRS 16 for the classification, recognition, initial and subsequent measurement, and the presentation of leases from the perspective of a lessee (10 marks); b. an analysis of the potential impacts on the companys financial position and performance from the application of the new rules (if the new rules were applied) to current lease contracts as per latest annual report (10 marks); c. an evaluation of whether AASB 16/IFRS 16 improves financial reporting (you are required to refer to the Conceptual Framework for the objective of GPFR and qualitative characteristics of useful financial information) (10 marks); and d. in the form of a conclusion, recommended actions to best prepare your company and the financial reporting unit for the new accounting treatment (5 marks).
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