Reference no: EM13141700

The proposed accounting standard for leases is just another layer of significant added complexity to already complex financial statements which will further reduce the usefulness for all users unless they have an academic degree,- says Tom Pockett, Woolworths chief financial officer. 
-It will put more hypothetical entries through the profit and loss account. There needs to be a proper benefits analysis as to why the world needs this change.- Pockett says companies with long-term debt in place could face breaching their debt covenants as a result of the IASB draft proposal. 
-The comments made that the standard is needed as companies have underestimated their liabilities is false and sensationalist. The lease commitments are already fully disclosed in the notes to the accounts. Any debt provider already takes these commitments into account when lending companies money, as do rating agencies when rating a company's credit risk. Instead of adding undue complexity we should be focusing on removing complexity and simplifying financial statements for all users.- 
Louis White, Global leases undergo changes, The Australian, January 29, 2011. 
2 
Required: 
In view of the joint International Accounting Standards Board (IASB)/Financial Accounting Standards Board (FASB) project to amend the current accounting standard on accounting for leases, you are required to adopt a report format and critically evaluate 
the above quotation. For instance, what assumptions are inherent in the quotation? What is the evidence-base for the assertions made in the quotation? Do you agree or disagree with the sentiments expressed? Why or why not? What is your recommendation in 
relation to the AASB Exposure Draft Leases (ED 202R August 2010), which is based on the joint IASB/FASB Exposure Draft? 
You are expected to utilise materials available from the relevant accounting standard setter(s) as well as research published in high quality, scholarly accounting and business journals available through the Business Source Complete database in the Swinburne 
University Library. See the last page for a list of quality, scholarly accounting and business journals. 
In your discussion, you should make reference to relevant theory/theor(ies) covered in the Unit's syllabus which might support, or contradict, the basis of your conclusions. Please note that Wikipedia is not an appropriate reference source. 
LODGEMENT: You must submit your assignment via Safe Assign facility available on Blackboard and also in hardcopy by the due date in the allocated assignment box located on the 11 th Floor of the BA Building (just next to the lifts) no later than 5 pm, Friday, 10 May 2013.