1. The main change is in case of Operating Lease. The change require the Lease Contract to be accounted as Lease Asset or Liability in the Balance sheet for the entities.

The change requires to differentiate the total amount into Lease & Non-Lease Component i.e. a part of the lease agreement will be treated as finance charge and will be amortized accordingly in the profit & loss account. It requires the Lessees should initially recognize a right-of-use asset and lease liability based on the discounted payments required under the lease, taking into account the lease term as determined under the new standard. Determining the lease term will require judgment which was often not needed before for an operating lease as this did not change the expense recognition. Initial direct costs and restoration costs are also included.

2. In past the lease payment was directly charged to the Profit & Loss account as expenses and there was no effect on the part of Balance Sheet except the decrease in the Profit foe the year to be taken to retained earning.

Journal posted Earlier:

a. Lease Rental Account Debit

Cash/Bank Credit

b. Profit & loss Account Debit

Lease Rental Account Credit

3. Yes, it's definitely an improvement as it gives a better picture of the users of Financial Statements and different stakeholder.

Can you please explain journal entries?

What does "rental account debit and credit" mean.

What account is "profit and loss"?