The favourite off-balance-sheet financing trick used to be leasing. Use any illustrative numerical examples you may wish to:

(a) Define the term ‘off-balance-sheet financing’ and state why it is popular with companies.

(b) Illustrate what is meant by the above term in the context of leases and discuss the accounting treatments and disclosures required by IAS 17 which have limited the usefulness of leasing as an off-balance-sheet financing technique.

(c) Suggest two other off-balance-sheet financing techniques and discuss the effect that each technique has on statement of financial position assets and liabilities, and on the income statement.

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