You are required to write a report to the non-executive directors of a Tesco Plc.The non- executive directors would like to understand the extent and impact of the use of judgement in their company’s financial statements. They are also aware that the IASB is working on a project that is likely to substantially change the accounting treatment for leases, and they are interested to know more about the project and its potential implications for their company’s financial statements.
Your report should:
(a) In respect of the company chosen, explain the use of significant judgement in developing accounting policies and estimation techniques, and evaluate the impact of these judgements on financial position and performance.
(b) Discuss the reasons for the IASB developing a new accounting treatment for leases and explain the progress made in respect of the IASB’s leasing project.
(c) Comment on the impact that proposed changes in lease accounting may have on the performance and position of Tesco Plc.