Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA APM Exams › chicory (sep/dec 2017)- question ratelated to lease
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Ken Garrett.
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- July 4, 2024 at 4:15 am #707808
in this answer to the question number 2: https://www.chinaacc.com/upload/html/2018/04/27/hocb5390c7c2844ca0a37b85131028f502.pdf have the following paragragh:
“EBITDA does, however, ignore the replacement costs of these assets. This might limit the usefulness of comparisons between Chicory and Fennel if one were to lease non-current assets and the other to purchase them. The introduction of a new accounting standard on the treatment of leases may, however, remove this limitation”
I donot understand the sentence :”The introduction of a new accounting standard on the treatment of leases may, however, remove this limitation”?. Please explain me more about this. Thanks!July 4, 2024 at 8:18 am #707812It is simply that if a new standard on the treatment of leases were to force both companies to account for leases in the same way then it would be easier to compare the performances of the companies. Eg both show leases assets as non-current assets on the SOFP.
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