Accounting for leases: an international perspective.

This article discusses a thesis which examined the financial and accounting aspects of international leasing. Accounting issues are addressed in Chapter 5 of the thesis covering both its comparative and pragmatic areas. The comparative area examines how and why accounting principles for leases differ from country to country, whereas the pragmatic area deals with lease-accounting operational aspects encountered by either international leasing companies or foreign lessees. The result of the survey shows that there is a rigorous correlation between classification, capitalization of finance leases by lessees and disclosure of operating leases by lessees. Countries that require a clear distinction between finance/capital leases and operating leases require capitalization by lessees of finance leases and disclosure of operating leases. In most West European countries there already exists a well-organized accounting profession, actively engaged in establishing and improving lease-accounting standards. This is reinforced in those countries by systems of company legislation which have recently been reformed in anticipation of approved European Commission Directives or are currently undergoing reform in order to incorporate those directives.