Case on Lease Accounting of a multinational telecommunication company (Robi Axiata limited, Bangladesh)

Abstract

This report has been prepared to present the obtained experience and knowledge during my 12 weeks internship period at Robi Axiata Limited, 53 Gulshan Avenue. Purpose of This report is to describe detailed information about lease related activities and accounting procedures that a Multinational Telecommunication Service Provider Company generally follows. To meet the purpose there are three objectives and those are understanding different type of lease and lease agreement, Factor that a multinational telecommunication company considers when they take lease and lease accounting procedure under IAS17 & IFRS16. To meet these objectives my methodologies are, went through Robi Axiata Limited’s lease agreements, interviewing a specialist of service and facilities department of Robi Axiata Limited and interviewing Manager, Financial Accounting & Management Reporting department. In general there are two types of lease under IAS17 those are Finance lease and Operating lease and in a lease agreement there are thirty two clause that describes all the terms and condition between lessee and lessor Moreover telecommunication service providing company took lease for their warehouse, walk in center, admin office and BTS tower building purpose there are different sets of factors to consider for each of those purpose. Currently Robi Axiata limited following IAS17 as their lease accounting method but from 1st January 2019 they will follow IFRS16 as their new method. There are two types of lease under IAS17 in the perspective of lessee these are Finance lease and Operating lease there are five tools to decide the classification. But the new standard IFRS16 eliminates the complexity of lease classifications. IFRS16 will treat all the lease in a single classification by testing three simple condition.