Desde IFRSbox

Hi!

Yesterday I wrote you that many companies got the lease accounting wrong. As a result, they end up being involved in off-balance sheet financing, which is really bad for their business reputation.

Off-balance sheet financing is simply some asset or debt financing NOT SHOWN in the company's balance sheet. Leases are a very perfect example. Why?

Because although the contract may say that a company leases an asset from another company, in fact, the contract’s conditions may be very similar to purchase.

IAS 17 Leases requires you to record such a transaction not in accordance with the strict legal form (legally, the owner of an asset remains the lessor), but in line with the “substance over form” principle.

How to do it? Well, enjoy lesson #1  here and learn how to apply lease accounting step by step!

Let me ask you a question: Do you hold some assets in your account? Sure, almost every company has some assets.

Are some of your assets overstated? Does your balance sheet show them in the realistic carrying amount or not?

What should we do when some of our assets are damaged, obsolete or impaired?  

Let’s find out in the lesson #2 that you’ll receive in the next e-mail!

Take care!

Silvia, IFRSbox.com