1.examine the commenwealth bank leasing,and analyse the nature of any finance leases and any...

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1.examine the commenwealth bank leasing,and analyse the nature of any finance leases and any oprating lease arrangements. In particular you are asked to ascertain if information provided is in compliance with the relevent australianaccounting standered . write down 1000 words this report. reference in text as well.

At end the session consider what improvement to the relevent australian accounting standered may improve the useability and transparency of the data you have analysed.

Robert · Accepted Answer

Overview 
Commonwealth Bank is Australia’s leading provider of financial services that includes retail and 
business banking, premium and institutional banking, superannuation, investment, insurance etc. As 
part of its business banking services, Commonwealth Bank provides hosts of services like: Accounts 
and cards, Merchant services, Investments, Risk management, and Loans, and Equipment Financing. 
In order to provide greater business benefits to customers, Commonwealth Bank offers finance and 
operating lease services to its customers for financing their business assets and equipments 
(Commonwealth Bank, 2013). 
Operating Lease: 
Australian Accounting Standard Board or AASB provides disclosure on accounting for leases (both 
operating and finance leases) under AASB 117. According to the AASB 117, under operating lease the 
lessor or the owner of the property/asset gives lessee the right to use an asset for a fixed number of 
period and future lease payments. Under this lease arrangement, the risk and reward associated 
with the asset is not transferred to the lessee rather the lessee only pays a rent for using this asset 
(AASB, 2010) (CPA Australia, 2007). 
Commonwealth Bank’s operating lease arrangement closely follows the guidance of AASB on 
operating lease and its operating lease product meets the basic requirement of the accounting 
standard. The basic premise of Commonwealth Bank’s operating lease arrangement is to preserve 
the working capital of its customers with this financing. Under the operating lease agreement 
between the bank and customer, the bank provides the customer with the rights to use an asset or 
equipment for business purposes for a specific period. This product was launched by the bank to 
provide its customer with a cost effective and efficient financing solution to meet their requirement 
of continuous upgrade of vehicle/ equipment (to meet the changing market demands) 
(Commonwealth Bank, 2013). 
Following are the features of the product (Commonwealth Bank, 2013): 
 Majority of the depreciable assets that have a finite economic life can be financed by the 
bank under the operating lease arrangement 
 Minimum tenure for the operating lease arrangement ranges from two to five years with a 
minimum lease amount of AU$10,

1.examine the commenwealth bank leasing,and analyse the nature of any finance leases and any oprating lease arrangements. In particular you are asked to ascertain if information provided is in...

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