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r /> The existing guidance, which was created by incorporating the principles under IFRIC 4 and confirming whether a Leasewas arrangedinto the exposure draft, is used by the proposals. So a lease and a contract that represents a purchase or sale or a service can be distinguished.
Rent is no longer a reduction to EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization)of companies under the proposed standard, so EBITDA may be higher compared with that under current lease treatment.Analyzing according to the current treatment, the interest coverage ratio remains constant, as the straight-lining of rent expense over the termmethod is used, but the interest coverage ratio is lower under the proposed standard, as theinterest expenseincreases.
Besides,the pattern of income and expense recognition in profit or loss would change significantly for this exposure draft.

2.2 Disadvantages discussion
Althoughthis exposure draft would result in significant changes in the measurement of the assets and liabilities that comefrom those leases due tothe way the exposure draft proposes to account for options and contingent rentals, the proposed changes may be less fundamental for leases currently classified as finance leases. It makes it difficultto regulate balance sheet by means of finance lease.But this is key to expand western lease industry( Lease Accounting Exposure Draft Released,2010)
Development of operating lease is particular existence value of leasing companies compared with banks. If operating leases are recorded in balance sheet, advantage and strength of finance leases will disappear. Leasing may become something similar with banks. thereforetheleasing company'sattraction to enterprises maybecome lower sharply. This industrial influence is worldwide. Many companies’ business in different areas in spite of western or eastern would be influenced. 
In addition, the suggestion maybe valid by means of other projects. The IASB and the KFCWare working on various projects in order to make this proposal effective.Definitely, this will consume much time, currency,and vigor.
The lease transactions arenot allcovered by the proposals, such as contracts that are labelled as leases but are actually purchase or sale arrangements. Leases of intangible assets (for example: software, patents and licenses) and leases to explore for or use minerals,Oil, natural gas and similar non-regenerative resources are excluded until the accounting for such items can be considered more broadly ( Snapshot: Leases,2010).
Some people think that operating leases do not meet the definition of an asset, so it is unnecessary to record them on the balance sheet. Instead, this will reduce usefulness and extraordinary nature of finance leases.
Finally, the change of lease accounting standard may increase costs of accounting measurement.

2.3 Illustrate

In order to analysis the impact on the financial statements of the proposed changes, I would like to illustrate it.

2.3.1 The impact on the balance sheet and Debt-to-Equity Ratio:
For the company I have selected,it signs a 10-year lease with annual rent of $144,000.Let me the different impact of the current treatment and the proposed standard to its balance sheet and Debt-to-Equity Ratio.

Balance sheet

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