Explore the Lessee Accounting Treatment When Utilizing the Islamic Financial Leasing: A Comparative Analysis of IFRS and AAIOFI Accounting Standards for the Financial Leasing

Morshed Amer () and Széles Zsuzsanna ()
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Morshed Amer: University of Sopron, Hungary, Alexandre Lamfalussy Faculty of Economics
Széles Zsuzsanna: Budapest Metropolitan University, Hungary, Institute of Business Sciences

Acta Universitatis Sapientiae, Economics and Business, 2020, vol. 8, issue 1, 69-78

Abstract: This study aims to discuss the effects of the AAIOFI accounting standards of financial leased assets on the accounting treatment of the lessee in the case of using the Islamic finance lease. The importance of this study became evident when AAIOFI announced Islamic accounting standards with a significant difference between the IFRSs about the recognition of leased financial assets. Islamic financial institutions recognize the financial leased assets following AAIOFI accounting under long-term assets in the statement of financial position. This study used the interviews as a qualitative research method with financial managers of Jordanian companies using Islamic financial leasing. This study reached the conclusion that both Islamic financial leasing parties recognize the assets in the long-term asset side. The recommendations to avoid the inflation of the Islamic financial leased assets will be by applying a reasonable accountancy treatment by the lessee and consider it as operational leasing with proper justification for the non-compliance with the IFRS.

Keywords: financial lease; IFRSs (IFRS 16); Islamic accounting standards (search for similar items in EconPapers)
Date: 2020
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Persistent link: https://EconPapers.repec.org/RePEc:vrs:auseab:v:8:y:2020:i:1:p:69-78:n:4

DOI: 10.2478/auseb-2020-0005

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