Abstract
References
- Tai, B.Y., 2013, “Constructive Capitalization of Operating Leases in the Hong Kong Fast-Food Industry”, International Journal of Accounting and Financial Reporting, vol. 3, no. 1, pp. 128-142.
- Imhoff, E., Lipe, R., and Wright, D., 1991, “Operating Leases: Impact of Constructive Capitalization”, Accounting Horizons, vol.5, no.1, pp. 51-63
- Fülbier, R.U., Silva, J.L., and Pferdehirt, M.H., 2008, “Impact of Lease Capitalization on Financial Ratios of Listed German Companies”, Schmalenbach Business Review, vol. 60, pp. 122-144.
- Imhoff, E., Lipe, R., and Wright, D., 1993, “The Effects of Recognition Versus Disclosure on Shareholder Risk and Executive Compensation”, Journal of Accounting, Auditing and Finance, vol.8, no.4, pp. 51-63.
- Imhoff, E., Lipe, R., and Wright, D., 1997, “Operating Leases: Income Effects of Constructive Capitalization”, Accounting Horizons, vol.11, no.2, pp. 12-32.
- Kostolansky, J., and Stanko, B., 2011, “The Joint FASB/IASB Lease Projects: Discussion and Industry Implications”, Journal of Business & Economics, vol.9, no.9, pp. 29-35.
- Paik, D.G.H., Smith, J.A.L, Lee, B.B., and Yoon, S.W., 2015, “The Relation Between Accounting Information in Debt Covenants and Operating Leases”, Accounting Horizons, vol.29, no.4, pp. 969-996.
- Lee, B., Paik, D.G., and Yoon, S.W., 2014, “The Effect of Capitalizing Operating Leases On the Immediacy to Debt Covenant Violations”, Journal of Accounting and Finance, vol.14, no.6, pp. 44-70.
- Ericson, J., and Skarphagen, R., 2015, Capitalization of Operating Lease and Its Impacts on Financial Ratios, Master Thesis, Jörköping University Jörköping International Business School.
- Wong, K., and Joshi, M., 2015, “The Impact of Lease Capitalization on Financial Statements and Key Ration: Evidence From Australia”, Australasian Accounting, Business and Finance Journal, vol.9, no.3, pp. 27-44.
- Bennett, B.K., and Bradbury, M.E., 2003, “Capitalizing Non-Cancelable Operating Leases”, Journal of International Finance Management and Accounting, vol.14, no.2, pp. 101-114.
- Beattie, V., Edwards, K., and Goodacre, A., 1998, “The Impact of Constructive Operating Lease Capitalization on Key Accounting Ratios”, Accounting and Business Research, vol.28, no.4, pp. 233-254.
- Duke, J.C., Hsieh, S.J., and Su, Y., 2009, “Operating and Synthetic Leases: Exploiting Financial Benefits in the Post-Enron Era”, Advances in Accounting, Incorporating Advances in International Accounting, vol.25, no.1, pp. 28-39.
- Singh, A., 2011, “A Restaurant Case Study of Lease Accounting Impacts of Proposed Changes in Lease Accounting Rules”, International Journal of Contemporary Hospitality Management, vol.23, no.6, pp. 820-839.
- Singh, A., 2010, “Proposed Lease Accounting Changes: Implications for the Restaurant and Retail Industries”, Journal of Hospitality & Tourism Research, vol.36, no.3, pp. 335-365. http://www.ifrs.org/Current-Projects/IASB-Projects/Leases/Documents/IFRS_16_effects_analysis.pdf (online 5 November 2015)
THE EFFECT OF THE IFRS 16: CONSTRUCTIVE CAPITALIZATION OF OPERATING LEASES IN THE TURKISH RETAILING SECTOR
Abstract
The new International
Financial Reporting Standard (IFRS) 16 issued by the International Accounting
Standards Board will significantly change accounting for leases. The most
important issue is that operating leases beyond one year will be capitalized,
which means Off-TheBalance Sheet (OBS) financing via operating lease is
effectively eliminated. “IFRS 16: Leases” will fundamentally change the way
that leases are accounted for and reported in financial statements. This paper
tries to illustrate the impact of IFRS 16 on financial statements and financial
ratios. The study is an ex ante research, simulating a predicted outcome of the
new lease standard, which will be in effect after 1 January 2019. For this
purpose, this research is applied to the Turkish retailing companies whose
shares are publicly traded in the Istanbul Stock Exchange. The study uses the
constructive capitalization method for these companies. The results indicate
that new standard will have a statistically significant effect on some of the financial
ratios tested (debt/asset, debt/equity, return on assets (ROA) and return on
equity (ROE)) for 2010 – 2013.
Keywords
IFRS 16 Operating Leases Accounting for Leases Lease Capitalization Turkish Listed Retailing Companies
References
- Tai, B.Y., 2013, “Constructive Capitalization of Operating Leases in the Hong Kong Fast-Food Industry”, International Journal of Accounting and Financial Reporting, vol. 3, no. 1, pp. 128-142.
- Imhoff, E., Lipe, R., and Wright, D., 1991, “Operating Leases: Impact of Constructive Capitalization”, Accounting Horizons, vol.5, no.1, pp. 51-63
- Fülbier, R.U., Silva, J.L., and Pferdehirt, M.H., 2008, “Impact of Lease Capitalization on Financial Ratios of Listed German Companies”, Schmalenbach Business Review, vol. 60, pp. 122-144.
- Imhoff, E., Lipe, R., and Wright, D., 1993, “The Effects of Recognition Versus Disclosure on Shareholder Risk and Executive Compensation”, Journal of Accounting, Auditing and Finance, vol.8, no.4, pp. 51-63.
- Imhoff, E., Lipe, R., and Wright, D., 1997, “Operating Leases: Income Effects of Constructive Capitalization”, Accounting Horizons, vol.11, no.2, pp. 12-32.
- Kostolansky, J., and Stanko, B., 2011, “The Joint FASB/IASB Lease Projects: Discussion and Industry Implications”, Journal of Business & Economics, vol.9, no.9, pp. 29-35.
- Paik, D.G.H., Smith, J.A.L, Lee, B.B., and Yoon, S.W., 2015, “The Relation Between Accounting Information in Debt Covenants and Operating Leases”, Accounting Horizons, vol.29, no.4, pp. 969-996.
- Lee, B., Paik, D.G., and Yoon, S.W., 2014, “The Effect of Capitalizing Operating Leases On the Immediacy to Debt Covenant Violations”, Journal of Accounting and Finance, vol.14, no.6, pp. 44-70.
- Ericson, J., and Skarphagen, R., 2015, Capitalization of Operating Lease and Its Impacts on Financial Ratios, Master Thesis, Jörköping University Jörköping International Business School.
- Wong, K., and Joshi, M., 2015, “The Impact of Lease Capitalization on Financial Statements and Key Ration: Evidence From Australia”, Australasian Accounting, Business and Finance Journal, vol.9, no.3, pp. 27-44.
- Bennett, B.K., and Bradbury, M.E., 2003, “Capitalizing Non-Cancelable Operating Leases”, Journal of International Finance Management and Accounting, vol.14, no.2, pp. 101-114.
- Beattie, V., Edwards, K., and Goodacre, A., 1998, “The Impact of Constructive Operating Lease Capitalization on Key Accounting Ratios”, Accounting and Business Research, vol.28, no.4, pp. 233-254.
- Duke, J.C., Hsieh, S.J., and Su, Y., 2009, “Operating and Synthetic Leases: Exploiting Financial Benefits in the Post-Enron Era”, Advances in Accounting, Incorporating Advances in International Accounting, vol.25, no.1, pp. 28-39.
- Singh, A., 2011, “A Restaurant Case Study of Lease Accounting Impacts of Proposed Changes in Lease Accounting Rules”, International Journal of Contemporary Hospitality Management, vol.23, no.6, pp. 820-839.
- Singh, A., 2010, “Proposed Lease Accounting Changes: Implications for the Restaurant and Retail Industries”, Journal of Hospitality & Tourism Research, vol.36, no.3, pp. 335-365. http://www.ifrs.org/Current-Projects/IASB-Projects/Leases/Documents/IFRS_16_effects_analysis.pdf (online 5 November 2015)
Details
| Journal Section | Articles |
|---|---|
| Authors | |
| Publication Date | March 30, 2016 |
| Published in Issue | Year 2016 |
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