Do not include the wording of the assignment questions (just refer to the questions numbers) in
your submission – if you do so, Turnitin will recognise this as plagiarism and you will have less
words to answer.
If you make reference to AASB accounting standards, your textbook or any other book in your
answers, you must make appropriate reference to your source using the Harvard Style referencing
Both in-text citations, as well as a reference list at the end of your assignment, are required. You
should refer to the referencing guidelines provided at
Note that when citing an annual report, either by paraphrasing or using direct quotes, you must
reference the annual report (in your reference list) according to the following format: Name of
company. (Year of publication) Title of annual report (in italics). Place of publication: Publisher.
To cite an annual report in-text, you will generally have to use the organisation’s name, as an author
name is usually not present.
Penalties for inadequate or incorrect referencing will apply.
• To achieve a general knowledge of the new accounting standards for leases and the possible
impacts on companies’ reporting you are provided with two extracts of academic articles and one
extract of newspaper article discussing the topic.
• If you need more information about this topic, there are several newspaper articles and reviews that
you can find if you search on the RMIT library website http://www1.rmit.edu.au/library.
• To answer the questions, you will need to read through the 2014 annual reports for Myer Holdings
Limited, Harvey Norman Holdings Limited and Kathmandu Holdings Limited.
• You can easily download the 2014 annual reports from these links:
• You will not be able to obtain all answers from the annual reports! You will need to refer to other
sources: your textbook and other financial accounting books.
• If you use or refer to AASB accounting standards, the textbook and any other sources, remember
that you have to provide citations and a final reference list (see Requirements for citation rules)
• You are required to answer four questions, which are marked 5 marks each according to the
1) Illustrate why in your opinion retailers with significant and long-term lease liabilities are
likely to be more affected by the new accounting standard for leases. Support your answer
with references from AASB117 Leases, your textbook, the resources presented above and
financial accounting articles and books.
2) Explain how the gearing ratio is usually calculated and why the new accounting standard for
leases might boost such ratio, forcing some companies to renegotiate debt contracts with
bankers. Support your answer with references from AASB117 Leases, your textbook, the
resources presented above and financial accounting articles and books.
3) Complete the following sentences with the data from the financial report 2014 pertaining to
Myer Holdings Limited, Harvey Norman Holdings Limited and Kathmandu Holdings
In the financial year ending 30 June 2014
a) Myer has net debt around $ 348 million but the net present value of its lease liabilities
(i.e. operating leases liabilities with commitment later than one year) as disclosed in its
financial report is estimated to be around $.3.03 billion, so its total debt would jump to
b) Harvey Norman has net debt of $........................... but the NPV of its leases is around
$...................., so total debt would rise to $.............................
c) Kathmandu has net debt of $............................. but the NPV of its leases is around
$......................, so total debt would rise to $...............................
4) In relation to the answers provided in (3) identify which might be the company most affected
by the change in the accounting standard for lease and justify your answer with references
from AASB117 Leases, your textbook, the resources presented above and financial
accounting articles and books.