Porter's Five Forces of Burberry Assignment Example | Topics and Well Written Essays - 500 words

Porter's Five Forces of Burberry - Assignment Example The most common barrier that may be faced by new entrants include; cost of entering this industry is very high given the fact that there has been new technological advancement. Secondly, Burberry tends to have cost advantage and well established channels for distributing its products. The cost advantage may acts as a major entry barrier to the new firms. Further, Burberry has well differentiated products such as; Trench coats that its competitors may not be able to emulate. However, fashion industry tends to be very dynamic. This means that entry barriers are low and therefore, Burberry should work to increase internal and external strength to compete with new entrants more efficiently and effectively (Totallyan, 2011). Burberry Company need to have numerous suppliers than it has currently. There is a need for the company to have numerous suppliers so that incase one supplier fail to deliver raw materials for manufacturing fashion products another supplier may be contacted. This may help to reduce loses emanating from prompt delivery of raw materials. In addition, having numerous suppliers may ensure that there is seamless flow of products into the fashion market (Merrill, 2008). In this case buyer’s power is relatively high in the fashion industry under which Burberry is operating. This is because the numbers of large players are increasing making it possible for buyers to switch into brands produced by other companies. However, most of the new entrants do not have differentiated products as compared to Burberry Company. This provides Burberry a competitive advantage over its competitors because of customers brand loyalty. In addition, the buyers are well informed about the products produced by Burberry. This tends to influence their power. Moreover, economic forces such as inflation may affect buyer’s power whereby, during inflation buyers power tend to be low as they become more sensitive to higher price changes (Kotler, Keller, and Lu

The Use of Animal By-products for Human Medicine Term Paper

The Use of Animal By-products for Human Medicine - Term Paper Example ill provide a background of the medical field and will be divided into two parts: the historical and culturally based background, and the prevailing contexts of the general utility of animal-based medicinal products. In the second section, I will discuss the legal and politico-economic dimensions of animal-based products, crucial in the preparation of medicines, with reference to economical, ecological, sanitary and cultural contexts. I will finally end the paper with a conclusive discussion of the future of animal-based products, with regard to the prevailing nature of their extraction and availability, as well as global viability and large-scale application. Here I will delve on why there is a need for consideration, with regard to the sustainable future utility of these products, in the growing global populations. Historical and Cultural Background Animals, as well as animal-derived products, from various parts of their bodies or organs, have through history, constituted an increa singly growing segment of medical substances’ general inventory. Their utility as sources of varying medicines is traceable to early historical times, as showcased through various cultural utilities, with this still being practiced in the field of herbal medicine. Through the aforementioned zoo-therapy, various ailments afflicting man, continue being treated and hence the importance of this form of medication to many populations. Human culture, individually/ uniquely and wholesomely, provides for a structured medical system, which utilizes different animal species, for various medicinal purposes (Costa-Neto and Eraldo 33). Amongst the myriad of therapeutic medical practices carried out within the larger global arena, zoo-therapy constitutes a vital alternative. Cultural and Historical... The paper will be organized into two main sections, which will further display the prevailing contexts influencing the need of anima-based products for human medicine. The first section will provide a background of the medical field and will be divided into two parts: the historical and culturally based background, and the prevailing contexts of the general utility of animal-based medicinal products. In the second section, the author will discuss the legal and politico-economic dimensions of animal-based products, crucial in the preparation of medicines, with reference to economical, ecological, sanitary and cultural contexts. The author will finally end the paper with a conclusive discussion of the future of animal-based products, with regard to the prevailing nature of their extraction and availability, as well as global viability and large-scale application. Here the author will delve on why there is a need for consideration, with regard to the sustainable future utility of these products, in the growing global populations. This paper makes a conclusion that with an increase in the monetary value of animals procured, with the both political and socio-economic can be either positive or negative. Positive if there is greater regulation and conservancy, with the latter resulting from increased poaching and clandestine procurement of animal species. Animal, as well as plant-based medicines, through increased utility in contemporary contexts, provide for a case study of how both western and traditional forms of medication can be incorporated into the overall human health and medical development.

Personal and Professional Development Essay Example | Topics and Well Written Essays - 1000 words

Personal and Professional Development - Essay Example Secondly, there is increased productivity and one of high quality due to efficiency in performance. Self-management is crucial in enabling an individual to follow set rules. This essay primarily entails information on the personal and professional organization. In addition, the study involves an investigation of the ways people can learn to identify suitable methods for development. Further, there are some suggestions on how concerned individuals can encourage lifelong learning in personal and professional context. Finally, the essay evaluates the benefits of self-managed learning for both the individual as well as the organization. Personal and professional development Personal development refers to the action of a particular individual to advance through various activities necessary for bringing awareness of one’s potential. Personal development is responsible for ensuring that an individual has all the requisites for actual job performance. Professional development refers t o the advancement of individual performance through specialization in a particular field. Professional development is crucial for personal development, as it takes into account advancement in a person’s career and impact on the organization (Bubb & Earley 2007, p. 42). It helps one to acquire high-tech skills useful in overall performance. The outcome of professional development is one exhibiting quality work. ... Secondly, personal and professional development is essential for the performance of the organization, which is through placement of skilled personnel in different departments after a scrutiny of the skills that one has. Additionally, personal and professional development acts as a tool for designing and setting organizational objectives. It also helps leaders learn about their weak side when dealing with workers (Tomlinson 2004, p. 119). Finally, personal and professional development helps individuals develop a better perception concerning the differences between them and others within the organization. These objectives are in line with skillful tactics of focusing on what is best is achievable in the organization within a certain period. Recommendation on how people could learn to identify suitable methods for development Individuals, whether working in organizations or venturing into small business entities need to learn more about essential methods for development. The reason for learning about the methods is that people desire to grow and that they need their businesses to grow on the positive side of the economy. There are various ways helping one to identify the best development methods to apply. For instance, one should have better leadership styles. Leadership is important especially in a large organization where an individual (specifically a manager), has to help set objectives related to performance towards completion of set targets. There is also management of conflict, which is of significance when an individual has to have a good relation with the environment. Conflict management helps individual set objectives that are achievable by the employees within

Long-Term & Short-Term Budgetting Essay Example for Free

Long-Term Short-Term Budgetting Essay Introduction Budgeting is indeed a key component in managing short and long term planning. To define a broad objective such as wealth maximization is clearly not sufficient to achieve the goal. It is very important for an entity to get into more details over how to work towards the objective. Businesses typically do this by crafting a long-term plan and short-term plan which I will be explaining in details. Budgeting Before I proceed, it is very important for us to understand what is budget and how it works. A budget is a formal written summary (or statement of management’s plan for a specified future time period, expressed in financial terms. A budget becomes an important basis for controlling operations and evaluating performance. Thus, it promotes efficiency and serves as a deterrent to waste and inefficiency (Carlon, et al., 2009, p. 882) Types of budget There are several types of budget namely trade receivables budget, sales budget, finished inventories budget, trade payables budget, production budget, direct labour budget and many more. The list continues and varies from industry to industry. Budget usefulness Budgets are generally regarded as having four area of usefulness. * Budgeting promotes forward thinking and the possible identification of short-term problem. * They can also be used to help co-ordinate various sections of the business. * They play an integral role into motivating managers to perform better. * Providing basis for a system control, and lastly * Budgets can provide a system of authorization for managers to spend within the limit. (Merchant, Hawkins, Anthony, 2006, p. 560) The Planning process Figure 1 the planning process Source: (Banham, 2000, p. N.A) The above shows the relationship between budgets, long-term planning and short-term planning. The budgeting process The development of the budget for the coming year generally starts several months before the end of the current year. The budgeting process usually begins with the collection of data from each of the subunits of the entity. Past performance is often the starting point in budgeting, from which future budget goals are formulated. The budget is developed within a framework of a sales forecast that shows potential sales for the industry and the entities expected share of such sales. Sales forecasting involves a consideration of such factors as: I. General economic conditions. II. Industry trends III. Market research studies development IV. Anticipated advertising and promotion V. Previous market share VI. Changes in prices VII. New products VIII. Technology Short-term planning Short-term planning or budgeting is a process that focuses on short term, commonly one year, and results in the production of budgets that set the financial framework for that period. It is likely to be expressed mainly in financial terms and is designed to convert the long-term plan into an actionable blueprint for the future. The short-term planning is mainly carried out by Tactical managers and Operational managers. The budget will define precise targets for sales revenues and expenses, cash flows, short-term credit to be given or taken, inventory requirements, personnel requirements, increase profits, control costs, and invest for the future. Long-term Planning â€Å"Exercise aimed at formulating a long-term plan, to meet future needs estimated usually by extrapolation of present or known needs. It begins with the current status and charts out a path to the projected status, and generally includes short-term (operational or tactical plans) for achieving interim goals.† (Business Dictionary, n.d.) The above is a definition of Long-term planning or Strategic planning is usually carried out by senior management. The long-term plan covers a period of at least three years (some go up to five years) on a quarterly basis, forcing the organization into that discipline of thinking further out than one year. These plans should be updated when the short-range plan is prepared. Long-term strategies defines its overall effort in building market share, increasing revenues, decreasing costs, issues such as business take overs, expansion plans, deletion of business segments and radical product/service segment. (Budgeting, 2010) The way in which planning process is conducted depends on the industry and culture of the entity. Nevertheless, the entity outlines its long-term goals and specifies its short-range plans in quantifiable terms which detail how it expects to accomplish its goals (Hillstrom, 2013, p. 4) Long term planning Vs. Short-term planning Now that I put the definition and the functions of long term and short term planning before you. We will now see the advantages of long term and short term planning. * The main difference is the time period involved. The maximum length of a budget (or short term) is usually one year, and these budgets are prepared often for shorter period of time. In contrast, long-range planning usually encompasses a period of 3-5 years. * A second significant difference is the emphasis. Budgeting is concerned with the achievement of specific short-term goals. Long-range planning, on the other hand, is a formalized process of selecting strategies to achieve long-term goals and developing policies and plan to implement the strategies. Management is also responsible to respond to opportunities and challenges with strategic response that arise from anticipated trends in the economic and political environment. * Thirdly, there is difference between the details in the planning. Short term planning can be very detailed, this is to provide a basis for control. While long-rang plans contain considerably less details, because the data are intended for a review of progress towards long-term goals rather than for an evaluation of specific results to be achieved. The main objective of long-range planning is to develop the best strategy to maximize the entity’s performance over an extended future period. * Lastly, many entities today use a continuous 12-month budget by dropping the month just ended and adding a future month. One advantage of continuous short-term budgeting is that it keeps management planning a full year ahead, compared to just one-time planning for long term. Conclusion The preparation of budget is a valuable exercise as it forces management to look ahead and plan long term goal rather than to look back at the past. Once the long term goal has been set, a detailed short term planning can then be created. It is hence vital that budgeting is created as accurately as possible, as an error in data collection could affect the whole of the company’s operational and financial activities. The full benefits of budgeting can only be gained when the actual results are compared with the budgeted results then corrective actions are in place. Thus budgeting is a key component in managing short and long term planning. References Banham, R. (2000). Better Budgets. Journal of Accountancy, N.A. Budgeting. (2010). Retrieved from Entrepreneur: http://www.entrepreneur.com/encyclopedia/term/82266.html Business Dictionary. (n.d.). Retrieved from Defination of Long-term Planning: http://www.businessdictionary.com/definition/long-term-planning.html Carlon, S., Mladenovic-Mcalpine, R., Loftus, J., Palm, C., Kimmel, P. D., Kieso, D. E., Weygandt, J. J. (2009). Accounting building business skills. New York: John Wiley Sons. Hillstrom, E. K. (2013, Jan 27). Budgets and Budgeting.. Retrieved from Encyclopedia of Small Business.Vol. 1. Gale Cengage: http://www.enotes.com/budgeting-reference/ Merchant, K. A., Hawkins, D., Anthony, R. (2006). Accounting Text Cases. Australia: McGraw-Hill Education.

Uses of Marijuana :: Free Essays Online

Hemp is a very useful plant. The reason why it is illegal today seems an easy question to answer, right? Because of the effects that it causes on the brain and body. Right? Wrong! The reasons why hemp was made illegal were reasons that the public were never exposed to. Before 1883 about seventy-five to ninety percent of the world's paper was manufactured from hemp bast fiber. The United States Department of Agriculture first proposed making paper from hemp pulp in the early 1930's. Although production had to wait until someone invented a machine that would separate the hemp pulp from the fiber cheaply. Meanwhile, Dupont Chemicals, Hearst Paper and Timber, and several other companies had developed a new way to make whiter paper out of trees. Just when they got all their patents and business going in 1936, someone invented the hemp 'decorticating' machine. This threatened to put all the tree companies out of business, because of the fact that hemp paper is cheaper to make. A huge sum o f capital was tied up in making tree pulp paper and shipping it for sale. Most of the tree-paper companies were very powerful and had many connections with the government. So in 1937, they launched a country-wide campaign to put a prohibitive tax on hemp. This was the first 'Reefer Madness Movement' and when we began to call cannabis-"Marijuana". At that time no one knew that marijuana was really cannabis hemp. The only knowledge about hemp that the public knew had been obtained from the many fabricated stories. All the public knew was that it was "the killer weed with roots in hell", because of the supposedly harmful effects that it had on the human body and mind, which by the way have all been reaserched again in depth and the previous conclusions of the effects of marijuana on the human body and mind, have all been disproven. Because of this most American's did not know where their clothes used to come from because synthetic fabrics had just becom popular. The first Levi's blue j eans were made from the hemp plant. I will including the following information in my paper; the many useful uses of hemp as a perspective product for the future, products such as; fiber, rope and twine, canvas, cloth and cotton, how it can replace our dependence on our forests for our paper products, and finally how easily it can be cultivated.

Personal Life and Perfect Dream Vacation Essay

Almost everyone has their own idea of a dream vacation. It’s the perfect place to get away from the reality of everyday life and the stress that goes along with it, and the choices and ideas of the â€Å"perfect vacation† are as varied as the people who dream about them. Some fantasize about lazing on a warm, sunny beach. Some dream of forests and wildlife, and fresh mountain. So what is my idea of the perfect dream vacation? It’s simple. It’s the place where there are no crowds, everything is familiar, the food is prepared to my specific taste, and the bed is my own. For me, there is no place like home. With a little forethought and planning, even home can be turned in to a dream vacation getaway. A leisurely breakfast is the perfect way to start each vacation day. A plate of fresh fruits, fluffy scrambled eggs, toast with butter, and a cup of hot coffee is sure to chase away that sleepy feeling and energize you for the day ahead. Maybe your favorite breakfast includes a bowl of cereal and a glass of orange juice, or a bagel with cream cheese and a cup of tea. Perhaps, while on vacation, you would like to try something new and different. Read more: My dream vacation essay Whatever your choice, be sure to take the time to just enjoy it. Of course, no vacation would be complete without a little bit of pampering and a vacation at home is no exception. If there is a spa in your hometown, make an appointment during one (or more) of the days of your scheduled vacation. Or, if you prefer, there are many different stores that sell all kinds of spa type items for use at home.| | My perfect vacation takes place during the warm summer months so a hammock in the back yard is the perfect place for daydreaming. There is nothing more relaxing than lying in a hammock under a shade tree while the gentle breeze of summer drifts over you and your mind wanders, either lost in carefree thought or traveling through the pages of your favorite book. If you don’t have a shade tree or a back yard, any comfortable place where you can sit back and relax will work. You may also choose to spend your time visiting some favorite local attractions or perhaps a leisurely stroll through a park. It really doesn’t matter what you choose to do, as long as you are having fun.. | | Vacationing at home allows you to take it easy and relax without the stress of schedules, travel plans, lost luggage and gas prices. You don’t have to worry about cab fares, or highway traffic. It can be as quiet and peaceful and exciting as you choose to make it. Your vacation at home can be tailor made to your specifications, wants, and desires. All it takes is a little thought, a little planning, and a little determination to make it the perfect dream vacation.| |

Fedex and UPS Essay

1. Accounting Treatments Capital Lease -Lessee Initially, the lessee recognizes the asset under his property, plant and equipment. The amount that should be debited is the Lower of asset’s fair value and present value of minimum lease payments. The present value is determined by discounting minimum lease payments using interest rates implicit in the lease. Also, initial direct cost that the lessee incurs in relation to the lease is added to the cost of recognized asset. On the credit side of the entry should be lease liabilities, which is in fact, some kind of a loan. The lease liabilities should be split into current and noncurrent liabilities as some payments are made within 12 months while others are made after 12 month of the reporting date. Subsequently, there are two things we must take care of. First, we must depreciate the lease asset over the economic life, not over the lease term because that doesn’t necessarily need to be the same. The entry is to debit depreciation expense in profit or loss and credit th e accumulated depreciation account. Secondly, we need to allocate the lease liability or minimum lease payments paid to the lessor into two parts; reduction of lease liability and finance charge or interest. IAS 17 requires the finance charge to be allocated so as to produce a constant periodic rate of interest (interest rate implicit in the lease) on the remaining balance sheet liability. (Refer to appendix A for journal entries Capital lease-Lessor The lessor is a finance provider, and therefore records lease receivables as the debit side of the entry. The lease receivable is the net investment in the lease, which is the total of minimum lease payments and unguaranteed residual value. Total of these two figures is gross investment in the lease and we need to discount it to present value using discount rate implicit in the lease and all this must be equal to fair value of the asset plus initial direct cost. The credit side to this entry is simply cash given out by the lessor. Subsequently, we have to split minimum lease payments received from the lessee between reduction of finance lease receivable and finance income similar to what the lessee would do. (Finance income should reflect a constant periodic rate of return on the lessor’s net  investment in the lease.) (Refer to appendix A for journal entries) Operating Lease-Lessee In an operating lease, the lessee does not recognize any asset. The lease payments are recognized as rent expense in profit or loss on a straight-line basis. The journal entries would include a debit to rent expense and credit to cash or accounts payable. (Refer to appendix A for journal entries) Operating -lessor Lease payments received from the lessee are recognized as revenue in profit or loss on a straight-line basis. The lessor keeps the asset on his financial statement and depreciates it in line with its fixed asset accounting policy. (Refer to appendix A for journal entries) Advantages of Operating Lease In an operating lease, the lessee is considered to be renting the equipment and thus the lease payment is recorded as rental expense. No assets or liabilities are recorded on the balance sheet (Off-balance sheet financing). This is beneficial for companies because it will result in a lower asset base, therefore creating a higher ROA. Operating lease will also display more desirable solvency ratios such as lower debt to equity. This off balance sheet method of recording will also produce better debt covenant ratios for the company to show its debt lenders. Moreover, some companies associate management bonuses to certain ratios such as return on capital, which would be more optimal looking if recorded under operating lease. Another major benefit of operating leases is the potential tax benefits. An operating lease may allow the company to deduct payments as operating expenses during the period in which they are paid. If the company purchases equipment, they may be able to deduct the in terest, as well as the cost of the depreciation. 2. Under current Financial Accounting Standards Board regulations, what business arrangements might FedEx have made in order to account for leases as operating leases rather than capital leases? An operating lease is usually coined as anything that is not classified as a finance lease.  Factors that an operating lease may include are: 1. If a lease does not significantly transfer all the risks and rewards, associated with ownership of an asset the lease 2. If the ownership of the asset is more likely to go back to lessor at the end of the term 3. The lessee does not have the option to buy the asset at a cost significantly below the fair value of the asset → ie. a bargain price. The term of the lease is not a major part of the economic life of the lease item. IAS 17 does not explicitly say how much is a major portion however ASPE states that 75% and above is a major portion. 5. If there is little or no risk to the lessee; all major risks are borne by the lessor. An example wo uld be cancellation costs. 6. The leased asset is of common nature; not specialized and can only be used by the lessee. 7. The present value of the total amount of minimum lease payments do not equal or is close to the fair value of the asset leased. Other Additional Criteria can be: 8. Whether fluctuation in fair value at the end of the lease accrue to the lessor 9. If the lessee does not have the option to extend the lease for a secondary period at a â€Å"below the market† price Arrangements FedEx would have to make to disclose the operating lease would include disclosures about: the outstanding payments left for non-cancellable operating leases for the time periods: within one year within two to five years after more than five years the total future minimum sublease income for non-cancellable subleases the lease and sublease payments recognised in income for the period the contingent rent recognised as an expense  the general description of significant leasing arrangements, including contingent rent provisions, renewal or purchase options, and restrictions imposed on dividends, borrowings, or further leasing For operating leases, IAS 17 states that the total lease payments should be incurred as an expense and would appear on the income statement regularly with the amount on a straight-line basis over the entire lease term. Any enticements that the lessee may have received from the lessor to enter into the lease arrangement, must also be divided on a straight line basis to offset the  rental expense. 4. Lease Capitalization on Financial Variable and Ratios Unrecorded Lease Liability and Debt-to-Equity Ratio Based on the ratios and calculations performed there are many incentives for companies to report leases as operating leases rather than capitalize them. It can be concluded that the impact of lease capitalization on the financial statements is far greater for FedEx than UPS, however both companies are reaping benefits from reporting leases as operating leases. Capitalizing leases requires that leases are recorded as assets and liabilities on the balance sheet. The Unrecorded Lease Liability is 98.41% of existing liabilities for FedEx and 8.27% for UPS. Thus, by not capitalizing leases, firms are able to decrease their liabilities and present a more lower debt/equity ratio.The Debt/Equity ratio gives stakeholders an indication of the capital structure of the firm. The ratio for FedEx moves from 0.97 to 2.70, which indicates a more leveraged capital structure. UPS ratio moves from 0.87 to 1.28. The capitalization of leases would not a llow FedEx to maintain a debt-equity ratio below 1, which would change shareholder’s view on the financial flexibility of the firm. If FedEx wishes to maintain a relatively low debt-to-equity ratio on their financial statements it would be unfavourable to capitalize leases. Return on Asset The Return on Assets (ROA) is another key ratio that is affected when leases are capitalized due to the increase in assets that the company owns. When leases are capitalized there is a decrease in ROA for both FedEx and UPS by 1.69% and 0.32%, respectively. This is a relatively significant drop in efficiency and further motivates firms to record leases as operating leases. Interest Coverage Ratio The interest coverage ratio informs stakeholders of a company’s ability to pay back their interest. There is a significant drop of 17.26 in FedEx’s interest-coverage ratio and a drop of 9.2 in UPS’s interest coverage ratio. This means that a certain amount of profit is attributed to the fact that leases are not capitalized. In conclusion, it is clear from the variables and the ratios analyzed why companies prefer to record leases as operating leases rather than capitalize them. Operating leases are kept off the balance sheet and their main impact on the income statement is rent expense since the risks of ownership are not assumed. On the other hand, when leases are capitalized, the present value of payments including interest expense,  is treated as a liability on the balance sheet. These two accounting methods result in ratios to be more favourable for the firm when leases are recorded as operating leases rather than financial leases. 5. New Exposure Draft: A Contract-Based Approach Development of Contract-Based Approach Leasing is a critical activity in business as it is a means of gaining access to assets, obtaining finance and reducing an entity’s exposure to the risks of asset ownership. Some key advantages of leasing assets rather than purchasing assets are 100% financing, flexibility and the tax advantages. Therefore it is crucial that leases are appropriately accounted for and nature and duration of the lease agreement is considered. Current models require lessees and lessors to account for leases as either finance leases or operating leases. A recurring criticism of this approach is that lessees are not required to recognize assets and liabilities arising from operating leases. We can see the benefits of this in the financial statements and ratios of FedEx and UPS, as discussed above. In our opinion capitalizing leases provides stakeholders of a less aggressive view of a company’s financial statements. The contract based approach ensures th at companies recognise the right to use an asset along with the contractual liability on its balance sheet. Recognition and Measurement (Lessee) IASB and FASB are proposing a new approach to lease accounting that ensures entities record assets and liabilities arising from a lease. With this new approach, a lessee would recognize assets and liabilities for leases with a maximum possible term of more than 12 months. Under this contract-based approach, the asset is taken on by the lessee as the right to use to asset and not the asset itself. This a key difference between the contract-based approach and finance leases. When the lease is acquired, the lessee would recognise a lease liability. This would refer to the obligation of the lessee to make recurring lease payments. Additionally, the lessee would recognize a right-of-use asset representing a lessee’s right to use the underlying asset for the lease term. The right-of-use asset would include the initial measurement of the lease liability, any lease payments made at or before commencement date and any initial direct costs incurred by the lessee. The proposal further categorizes the leases into Type A and Type B leases. Type A Lease Recognition Leased assets other  than property (such as equipment and vehicles) would be classified as a Type A lease. However, if the following two conditions are met, the lease would be classified as a Type B: if the lease term is an insignificant portion of the asset’s economic life and if the present value of the lease payments is insignificant relative to their fair value. Initial measurements for a Type A lease would include a right-of-use asset and a lease liability. The lease liability would be measured at the present value of the lease payments, measured at the rate charged by the lessor. If that rate cannot be immediately determined, the lessee uses the incremental borrowing rate. Subsequent measurements would recognize interest expense and the amortization of the right-of-use asset separately on the income statement and balance sheet. This would be accounted for separately from the amortization of the asset. Type B Lease Recognition Leased assets of property (such as land or a building) would be classified as Type B leases. Initial measurements would be parallel to the initial measurements of Type A assets. However, subsequent measurements would recognize a single lease cost. This cost would be a measurement of the interest expense as well as the amortization of the asset. This combined figure would be calculated on a straight-line basis. Effect on Existing Operating Lease Existing operating leases must be appropriately treated based on the a ccounting standards for leases. Leases that were previously reported as operating leases by lessees should be recognised using the new approach at the beginning of the earliest comparative period. The lessee should recognize the lease liability, which is the present value of the remaining lease payments. For Type A leases, a right-of-use asset is measured as a proportion of the lease liability. The proportion is based on the remaining lease term at the time of the earliest comparative period. Additionally, the right-of-use asset recorded should be adjusted for any previously recognised prepaid or accrued lease payments. On the other hand, for Type B leases, a right-of-use asset is measured at an amount that equals the lease liability. The asset is then adjusted for previously recognised prepaid or accrued lease payments.