How is the Lease and Conceptual Framework relate to each other? Explain any flows, disadvantages, and...

How is the Lease and Conceptual Framework relate to each other? Explain any flows, disadvantages, and impacts on reporting.

How is the Shareholder value are Integrated Reporting relate to each other? Explain any flows, disadvantages, and impacts on reporting.

Expert Solution

1. There is always an ongoing debate around lease accounting approach to treat assests and liabilities in lease contracts. Hence, FASB release conceptual frameworks wrt definition of assets and liabilities in a lease contract. Assets and Liabilities are identified and treated in both financial and whole asset approaches.

Assets- Probable future economic benefits

Liabilities- Probable future economic sacrifices

Disadvantage- Many leasing companies exposes their leasing strategies to volatile market interest risk and property value risk.

Impact on Reporting- Difficult to translate the ever fluctuating property value(gain/loss) into a single number to report on financial statements

2. Integrated Reporting attracts shareholder's attention and invariably increases shareholder's value of a firm. Integrated reporting focuses on non-financial disclosures of a company from ethical and social responsibility standpoint.

Disadvantage- Qualitative information like IPR and Human capital may be alarming for investors; but, the firm might enjoy huge profits at the expense of huge attrition.

Impact on Reporting- A combined wholesome document of financial and non-financial info of a firms gets reported. It brings out the enterprise value as wealth being created for the economy vis s vis with the utilisation human and enviornmental resources.

ekkarill92 answered 2 years ago

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