Postpending accounting: Amortization advice: Amortization for the year ended March 31, 2010 is a simple annual expense, but you must also take into account depreciation and amortization for the first six months of the lease due to the year ended March 31, 2009, which is required to find the final value on the balance sheet. While the «GAAP freezing rules» described above allow borrowers to avoid immediate defaults, they cannot solve all the problems that borrowers and lenders face in credit contracts because of changes in credit accounting. First, borrowers` total assets and liabilities will suddenly soar on their balance sheets and, in the event of liabilities, will be very different from the total debt used to calculate their debt ratios, making it more difficult for lenders to determine compliance with a company`s agreements on balance sheets (and more difficult for borrowers to calculate this compliance). While this issue does not only apply to credit transactions and credit contracts, lenders must adjust their operations through borrowers` balance sheets. The Von Leasing accounting theme is a popular F7 paper audit area that could be included in questions 2, 3, 4 or 5 of the review to varying degrees. This theme is currently being addressed by IAS 17, Leasing. IAS 17, Leases adopts the concept of substance by form and applies it to the specific accounting area of leases. In applying this term, it is often considered necessary to take into account the content of a transaction, i.e. its economic reality and not its strict legal form.

In other words, the legal basis of a transaction can be used to mask the true nature of a transaction. It is argued that by applying the substance, the accounts become more reliable and ensure that the lease is presented faithfully. IFRS Leases 16 comes into effect on January 1, 2019. For public organisations and businesses, the new GAAP rules will come into force on 1 January 2019, and for non-public organisations and businesses, the new rules will come into force on 1 January 2020. Borrowers negotiating loan contracts, insights or amendments until the new rules come into force should consider the potential impact of these changes on their agreements and review the new rules with their accountants, legal advisors and lenders to determine how to address the resulting problems. Many observations and loan agreements already provide that the accounting rules in place at the time of implementation of the applicable agreement continue to apply, despite any changes that may occur in the future. These provisions, which may eventually «freeze» GAAP or IFRS, are sometimes accompanied by an agreement between the parties to negotiate a change in good faith when the new rules come into force. However, the «freezing» of accounting rules in this way may require the establishment of two sets of accounts (one according to the old ones and the other under the new rules) of the borrower, as well as an agreement between the two, which may weigh on management.