EFFECT OF FINANCIAL LEASING ON FINANCIAL STATEMENTS AND RATIOS BY TURKISH ACCOUNTING STANDARDS (IAS) 17

Abstract

The firms have options of “purchasing" or "hiring" methods to obtain the economic assets needed to perform their activities. Especially when it comes to fixed assets, firms prefer to hire option since they initially do not want to invest a significant amount of funding for long-term assets or the difficulty of finding the necessary funds for the purchase or assets pose a high risk to the firms.In this respect the firms’ hiring preferences may be in terms of operating leases or finance leases. However, these rental preferences can caused significant differences in the company’s income statement and statement of financial position (balance sheet). Explaining the lease in terms of tax legislation and Turkey Accounting Standards (TMS), we mean to determine the differences between operating lease and financial lease which begin with the accounting process and evaluate the effects on the financial statements and the ratios