How will proposed lease accounting changes affect your real estate strategy?
Last March, the Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB) issued a joint discussion paper highlighting proposed changes to the accounting treatment of operating leases. The financial accounting standards for leases (FAS 13) changes outlined could have an enormous impact on the balance sheets and income statements of most companies.
Read the full story to learn how this important change could affect the real estate strategy of your company.
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Reclassify operating leases as capital leases will have an enormous impact on the company balance sheet. For most companies this will mean millions of dollars being moved around in ways that will affect their profitability and overall valuation. For the industry as a whole the magnitude of this change will be hundreds of billions of dollars. The affect on software vendors requires us to re-tool our applications so they are compliant with the new regulations. Given the adverse affect this could have on the economy, this is a big deal.
I had seen commentary regarding this proposal circulated last year. In discussing it with a few finance colleages, none of them seemed to be overly concerned. They indicated that proposals such as this take considerable time to move through the process of adoption, if they go anywhere at all. I’m not a finance professional, but this was the reaction from individuals who are…