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Leases: Practical implications of the new Leases Standard
Introduction
The International Accounting Standards Board (IASB) and the Financial Accounting Standards Board (FASB) (the Boards) are working together to improve the accounting for leases. In an effort to achieve this objective, the Boards reached a common ground that a customer (lessee) leasing assets should recognise assets and liabilities arising from those leases, including leases that are off balance sheet today.
The Boards jointly published a revised Exposure Draft Leases (the 2013 ED) in May 2013. The Boards received extensive feedback on their proposals, and have heard a broad range of views. Since March 2014 the Boards have re-deliberated on nearly all aspects of the project. They will decide upon the effective date of the new Leases Standard in the next few months. The IASB has indicated that it has plans to issue the new Leases Standard before the end of 2015.
The lessee accounting model developed
The model is from the view that, at the inception of a lease, the lessee obtains the right to use an asset for a period of time and has an obligation to pay for that right. Therefore, it requires that for all leases, the lessee should: * recognise lease assets and liabilities on the balance sheet, initially measured at the present value of unavoidable lease payments; * recognise amortisation of lease assets and interest on lease liabilities over the lease term; and * separate the total amount of cash paid into a principal portion (presented within financing activities) and interest (presented within either operating or financing activities).

Effects on the financial statements of the lessee
Recognition (statement of financial position)
Since the model requires the lessee to recognise lease assets and liabilities on the balance sheet at inception, there will be significant effect for lessees that

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