Transcript Hinweise - Leaseurope

Automotive Leasing Business‘s Take on
Leasing Accounting
Leaseurope One-Day-Business Forum – Brussels – 5th Nov 2007
Dr. André H. Grabowski – Chief Accountant – Volkswagen Leasing GmbH
Automotive Leasing Business‘s Take on Leasing Accounting
1. Significance of Leasing to Captive Companies using the example of Volkswagen
Group
1.1
1.2
1.3
1.4
Volkswagen Leasing GmbH
International Leasing Activities within the Volkswagen Group
Volkswagen Leasing GmbH‘s Client Base
The Criteria for Differentiating the Operate and Finance Lease pursuant to IFRS and
German Tax Law
2. The Impact of the IASB Leasing Project
2.1
2.2
2.3
The Aim of the Leasing Project and the Standard-Setter‘s Criticism on the Current
Regulations
The „Right-of-use-Approach“
The Impact of the Leasing Project on Volkswagen Leasing GmbH‘s clients
3. Conclusion
Dr. André H. Grabowski – Chief Accountant – Volkswagen Leasing GmbH
5. November 2007
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1.
1.1
1.2
100%
1.3
1.4
2.
2.1
100%
2.2
2.3
3.
Branch Milan/Italy
Leasing
Leasing
Leasing
Leasing
Leasing
Branch Verona/Italy
Dr. André H. Grabowski – Chief Accountant – Volkswagen Leasing GmbH
5. November 2007
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1.
International Leasing Activities of Volkswagen Group
1.1
1.2
1.3
1.4
2.
2.1
2.2
2.3
3.
Dr. André H. Grabowski – Chief Accountant – Volkswagen Leasing GmbH
5. November 2007
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1.
Volkswagen Leasing GmbH‘s Client Base
1.1
1.2
1.3
1.4
2.
2.1
2.2
Private Customers
2.3
3.
Volkswagen Employees
Corporate Customers
Individual Commercial
Customers
Dr. André H. Grabowski – Chief Accountant – Volkswagen Leasing GmbH
5. November 2007
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1.
Operate and Financial Lease according to German Tax Law
1.1
1.2
Main Distinctive Criteria according to German Tax Law
1.3
1.4
2.
2.1
2.2
2.3
3.
1. Relationship between basic lease period and the asset depreciation range
of the leased property

Leasing Period not less than 40% and not exceeding 90% of the asset
depreciation range
2. Agreement for a put option on the part of the lessor

No put option for the leased asset on part of the lessor
3. Agreement on the right of termination on the part of the lessee

Contractual requirement on part of the lessee for a final payment
amounting to the costs not covered by the leasing relationship
4. Agreement on profit sharing in the event of windfall profits

Lessor must receive a minimum of 25% of the amount exceeding the
residual value of a leased property upon sale of the same
Dr. André H. Grabowski – Chief Accountant – Volkswagen Leasing GmbH
5. November 2007
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1.
1.1
Volkswagen Leasing GmbH’s Current Contracts according to
German Law and according to IFRS
1.2
1.3
1.4
2.
IFRS
German Law
2.1
2.2
2.3
3.
Operate Lease
Operate Lease
Financial Lease
Financial Lease
Dr. André H. Grabowski – Chief Accountant – Volkswagen Leasing GmbH
5. November 2007
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1.
The Standard-Setter‘s Criticism on the Current Regulations
1.1
1.2
1.3
1.4
2.
2.1
„I
doubt you‘ve ever flown in an aircraft that‘s on the balance sheet“
2.2
Sir David Tweedie
2.3
3.
Dr. André H. Grabowski – Chief Accountant – Volkswagen Leasing GmbH
5. November 2007
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1.
Aircraft on the Balance-Sheet?
1.1
1.2
1.3
1.4
Deutsche Lufthansa AG:
Assets as of 31.12.2005
2.
2.1
2.2
2.3
3.
Dr. André H. Grabowski – Chief Accountant – Volkswagen Leasing GmbH
5. November 2007
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1.
1.1
1.2
Inconsistancy between the IAS 17 and the Framework
Asset:
1.3
1.4
2.
2.1
…a resource controlled by the entity as a result of past events and
from which future economic benefits are expected to flow to the entity.
2.2
2.3
3.
Liability:
…a present obligation of the entity arising from past events,
the settlement of which is expected to result in an outflow
from the entity of resources embodying economic benefits.
Dr. André H. Grabowski – Chief Accountant – Volkswagen Leasing GmbH
5. November 2007
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1.
1.1
1.2
Currently discussed Accounting Models for Leasing
Relationships
1.3
1.4
2.
2.1
2.2
2.3
3.
1. “Right-of-use-Approach”
„Right-of-use-Approach“
2. „Whole-Asset-Approach“
3. „Executory-Contract-Approach“
4. „Current-Model“
Dr. André H. Grabowski – Chief Accountant – Volkswagen Leasing GmbH
5. November 2007
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1.
1.1
1.2
The „Right-of-Use-Approach“ impact on the lessee‘s
Balance-Sheet
1.3
1.4
2.
2.1
2.2
A
Lessee
L
Non Current Assets
Equity
2.3
3.
Intangible Assets
Liabilities
Trade Liabilities
Current Assets
…
…
The „Right-of-Use-Approach“ results in a Balance-SheetExtension on the part of the lessee!
Dr. André H. Grabowski – Chief Accountant – Volkswagen Leasing GmbH
5. November 2007
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1.
1.1
Economical Significance of SMEs
1.2
1.3
1.4
2.
2.1
2.2
2.3
Enterprises
Employees
Turnover
3.
Trainees
Gross Value Added
Source: Institut für Mittelstandsforschung, Bonn, 2005
Dr. André H. Grabowski – Chief Accountant – Volkswagen Leasing GmbH
5. November 2007
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1.
Intention of German SMEs to report according to IFRS
1.1
1.2
1.3
1.4
2.
2.1
2.2
2.3
3.
No
Yes
PricewaterhouseCoopers: IFRS in Medium-Sized Enterprises, 2005
Dr. André H. Grabowski – Chief Accountant – Volkswagen Leasing GmbH
5. November 2007
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1.
1.1
1.2
1.3
Leasing Project‘s Impact on Lesses‘ Balance-Sheet
Changes in the Intensity of Fixed Asset Investments of selected DAX/MDAX
Companies*
1.4
Changes in %
Number of
Companies
Less than 1 %
7
1-2%
4
2-3%
2
3-4%
1
4-5%
1
More than 5%
3
2.
2.1
2.2
2.3
3.
* Leibfried/Rogowski in KoR 12/2005 p. 552
Dr. André H. Grabowski – Chief Accountant – Volkswagen Leasing GmbH
5. November 2007
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1.
Leasing Project‘s Impact on Lesses‘ Balance-Sheet
1.1
1.2
Changes in the Capital Ratio of selected DAX/MDAX Companies*
1.3
1.4
Changes in %
Number of
Companies
Less than 1 %
9
1-2%
5
2-3%
-
3-4%
2
4-5%
1
More than 5%
1
2.
2.1
2.2
2.3
3.
* Leibfried/Rogowski in KoR 12/2005 p. 552
Dr. André H. Grabowski – Chief Accountant – Volkswagen Leasing GmbH
5. November 2007
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1.
1.1
1.2
Conclusion –
Questionable Value Add of the Leasing Project
- „Additional“ Information can already be deciphered from Annual Reports to large extent (notes).
1.3
1.4
2.
- Fragmentation of leased assets into a multiple sub rights does not lead to a more accurate
picture of the reporting company but rather to confusing balance sheets.
2.1
2.2
2.3
3.
- Besides a conceptional faultlessness a Standard has to be practicable. The practicability
would no longer be ensured.
- Discreation regarding Recognition of Leasing Properties in the lessees‘ balance-sheets
does not lead to the alarming deficiencies as described by Sir Tweedie and the SEC.
- Inconsistancy between the IAS 17 and the Framework could be rectified by means of an
adjustment of the Framework.
- A further increase of Complexity in Leasing Accounting -albeit only for a
Minority of lessees- is in any case unacceptable for Volkswagen Leasing GmbH!
Dr. André H. Grabowski – Chief Accountant – Volkswagen Leasing GmbH
5. November 2007
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Thank you very much for your Attention!
Dr. André H. Grabowski – Chief Accountant – Volkswagen Leasing GmbH
5. November 2007
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