Debate: Potential Effects of the FASB / IASB plan
Yesterday, Tririga published a very interesting article about the exposure draft detailing proposed lease accounting changes that the Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB) will release this month. How these lease accounting changes will effect Fortune 500 companies has been described excellently by Amanda M. Grossman and Steven D. Grossman, in their article “Capitalizing Lease Payments, Potential Effects of the FASB / IASB plan“.
Standards
If the Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB) issue a standard on accounting for leases that sharply curtails the suitable applicability of operating leases, many companies will be required to convert their operating leases to capital leases.Such a conversion would have an effect on both current and total liabilities for companies currently reporting wouldbe capital leases as operating leases.
Research
Of the top 200 companies of the Fortune 500 list for 2009, 91 were chosen for study. Without discounting, 60 of the companies would have increased their current liabilities by less than 5%, but 21 would have increased them by at least 10%. With discounting, 70 of the companies would have effects of less than 5% for current liabilities, but 13 would have increases of at least 10%; for total liabilities, the effect was less than 5% for 50 companies but at least 10% for 29 companies. These increases could have important implications for financial analysis. (Source: Amanda M. Grossman and Steven D. Grossman)
Debate
In this week’s debate I would really to know the proposed the impact of these changes for smaller organizations. So what are your expectations, and more important what have you done to prepare yourself?
Please use the comment feature below this post for your comments.
Related Posts
- Proposed major lease accounting changes must be addressed at the portfolio level
- Thoughts on the proposed FASB GAAP lease accounting changes
- The cost of waiting to upgrade your Lease Admin Systems for FASB
- Fortune 500 companies express concern over cost of new lease accounting rules
- Tentative” – The FASB IASB word of choice!
