The reporting of leasing transactions according to the Turkish financial reporting standard 16 leases

In Turkey, the TAS 17 Standard for Leasing transactions related to leasing contracts has been replaced by Turkish Financial Reporting Standard 16 Standard for Leasing in 2019 due to the announcement of the Public Oversight, Accounting and Auditing Standards Authority of Turkey in April 12, 2018. Given that TFRS 16 implies different provisions for reporting operating lease than TAS 17, it makes it obligatory to report operating lease contracts in the balance sheet, which have been left out under the TAS 17. In this way, the TFRS 16 abrogates the difference between operating lease and financial lease. Consequently, the balance sheet will contain both the lessee's right-of-use of assets and leasing obligations in one leasing model. Reporting operating lease contracts in the balance sheet will cause substantial changes in the financial statements of the enterprise. In this context, this study aims at evaluating the effect of operating lease contracts on financial statements. Thus, first of all, the innovations implied by the TFRS 16 Leasing Standard in comparison to the TAS 17 Standard of leasing proceedings are set out. Subsequently, it is explained how operating lease and financial lease has to be reported in financial statements regarding both the lessee and lessor by giving examples for lease transacions. Finally, the application of operating leases and financ leases in accordance with TFRS 16 Leases is presented. Since TFRS 16 Leases standard includes fundamental changes in operating leases and accounting, exemplary applications regarding operational leases are important in terms of shedding light on the transactions and records to be performed under TFRS 16.