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https://hdl.handle.net/2440/116002
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Type: | Journal article |
Title: | Converting financial statements: operating to capitalised leases |
Author: | Xu, W. Davidson, R.A. Cheong, C.S. |
Citation: | Pacific Accounting Review, 2017; 29(1):34-54 |
Publisher: | Emerald Publishing |
Issue Date: | 2017 |
ISSN: | 0114-0582 2041-5494 |
Statement of Responsibility: | Wei Xu, Robyn Alexandra Davidson and Chee Seng Cheong |
Abstract: | Purpose – The purpose of this paper is to examine how capitalising operating leases under IFRS 16/AASB 16 affects the financial statements and value relevance of financial information. In doing so, limitations of exiting methods are highlighted and improved upon. Design/methodology/approach – Imhoff et al.’s (1991) constructive method for capitalising operating leases is improved upon and used to restate the financial statements of 165 S&P/ASX200 companies. The financial position, key ratios and value relevance are tested for significant differences. Findings – The results provide evidence that capitalising operating leases affects financial statements and value relevance. Originality/value – Imhoff et al.’s (1991) constructive method has been refined, providing an improved method for capitalising operating leases than the one that has been used in the past. From a practical perspective, this research provides evidence supporting the “right-of-use” method proposed by the IASB which will see previous off-balance-sheet leases recognised. |
Keywords: | Value relevance; AASB 16; capitalised leases; constructive method; IFRS 16; leases |
Rights: | © Emerald Publishing Limited |
DOI: | 10.1108/PAR-01-2016-0003 |
Published version: | http://dx.doi.org/10.1108/par-01-2016-0003 |
Appears in Collections: | Aurora harvest 8 Economics publications |
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