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Abstract (2. Language): 
There has been a common or general accepted universality most likely called historical cost basis for basic financial statements, which are income statement and balance sheet. While balance sheet shows ali assets of the firm and its sources as of the end of the period utilized, income statement covers the data about the firm's performance in terms of revenues, expenditures, incomes, expenses, ete. as of the period ended. There are common concepts and generally accepted principles as acerual basis for those statements. But from country to country, there could be so many differences coming from their social, political, cultural, or economical situations. As a result of this, in Turkey, there are some differences from the universai ones that distort financial reporting. Most of them are the effects of taxation procedures. Turkey, as a bridge between Europe and Asia, has had a high İnflation rate for the decades. Average rate for the last quarter of the century has been more than 80% annually. Consequentty by utilizing historical cost basis, ali financial reporting activities have been failure. My objeetive in this paper is to explore to the inîernational public about the accounting and reporting practices in Turkey in regarding . The backround and evolution of the finance leases, . The authorities of accounting standard setting for finance leases, . Accounting approaches utilized for capital leases and fheir concequences, . How taxathn procedures distort financial reporting; income statement and balance sheet. İn order to achieve these objeetives mentioned above, an illustrative example from the real accounting praetice in the business enviroment of Turkey has been utilized İn the paper. Consequently, the information users as interest groups of the enterprises could realize the differences between the approaches that have been explored in the paper. İnterest groups can be national and/or international because of the globalization. Foreİgn capital investments as multinational companies have had at least two accounting sets: The first is to meet national taxation accounting rules, the second is toprovide useful accounting information nededin regarding of the International Accounting Standards or the United States General Accepted Accounting Principles. Currently, ali financial institutions, such as banks and finance teasing companies, vvhether national or İnternational are supposed to prepare two different sets of financial reports. The first set is related to tax reporting. The second one, as required by the Department of Treasury is prepared to reflect the reçuirements of the International Accounting Standard No 17, Accounting for Leases, This second set of reporting has been in effect since December 31, 1997.