International Accounting
 

Accounting for financial instruments in lease transactions

Vol. 20, Iss. 10, MAY 2017

PDF  Article PDF Version

Received: 21 February 2017

Received in revised form: 6 March 2017

Accepted: 10 April 2017

Available online: 29 May 2017

Subject Heading: INTERNATIONAL STANDARDS OF ACCOUNTING AND REPORTING

JEL Classification: M40, M42

Pages: 563-578

https://doi.org/10.24891/ia.20.10.563

Plotnikova O.V. Sevastopol Branch of Plekhanov Russian University of Economics, Sevastopol, Russian Federation
vcplotnikov@yandex.ru

Bezhan M.V. Sevastopol Branch of Plekhanov Russian University of Economics, Sevastopol, Russian Federation
mm180883@mail.ru

Moskaleva V.A. Sevastopol Branch of Plekhanov Russian University of Economics, Sevastopol, Russian Federation
vlada0601@mail.ru

Subject The article considers issues related to generation of accounting information on the use of financial instruments in lease transactions.
Objectives The purpose of the study is to reveal the possibility of use of financial instruments in lease transactions, providing for a reflection of changes in market conditions in the financial results of the lessor and the lessee.
Methods One of significant achievements of the positive theory of accounting is the understanding that all agreements are concluded under market economy conditions. Therefore, the theory of contracts and the relevant concept of relative property rights redefine the system of lease relations.
Results We propose two models to account for financial instruments in lease transactions, i.e. a model for option accounting in finance lease and a model for forward contract accounting in operating lease. The latter model is developed in addition to requirements of IFRS 16 Leases that consider using only options.
Conclusions The offered models for financial instruments accounting enable to record accounting processes of lease relationship in the structure of financial market participants' relationships, which is one of conditions of market relations development.

Keywords: operating lease, finance lease, option, forward contract, right-of-use asset

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