Part 1: New Lease Accounting – IFRS 16 Leases Effect Analysis.What are the top three industries most affected by IFRS 16 as measured by the present value of future payments for off-balance-sheet leases to total assets? Which leased assets propel them to the top three? Also, discuss the extent that smaller firms would be affected by IFRS 16.Which payments are to be included in the measurement of lease assets and lease liabilities? Also, discuss the pros and cons of excluding the following payments from the measurement.Variable lease payments linked to future use or salesOptional payments relating to lease-extension option when a lessee is not reasonably certain to exercise the option.Discuss the effects of the new accounting on the following items and ratios of lessees. Provide reason(s) behind all effects.EBITDA, operating profit, and profit before taxOperating cash flow, financing cash flow, and total cash flowDebt to equity, current ratio, and return on total assets

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Answered: Part 1: New Lease Accounting – IFRS 16…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Part 1: New Lease Accounting – IFRS 16 Leases Effect Analysis.

What are the top three industries most affected by IFRS 16 as measured by the present value of future payments for off-balance-sheet leases to total assets? Which leased assets propel them to the top three? Also, discuss the extent that smaller firms would be affected by IFRS 16.
Which payments are to be included in the measurement of lease assets and lease liabilities? Also, discuss the pros and cons of excluding the following payments from the measurement.

Variable lease payments linked to future use or sales
Optional payments relating to lease-extension option when a lessee is not reasonably certain to exercise the option.

Discuss the effects of the new accounting on the following items and ratios of lessees. Provide reason(s) behind all effects.
EBITDA, operating profit, and profit before tax
Operating cash flow, financing cash flow, and total cash flow
Debt to equity, current ratio, and return on total assets

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