KW Commercial New Hampshire & Massachusetts

KW Commercial New Hampshire & Massachusetts

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Proposals to modify the current rules for lease reporting may change. This proposed accounting change could boost reported company debt by requiring a company to  report a lease that is not showing on a balance sheet, affecting an increase of billions of dollars of debt the Wall Street Journal reported. What is at stake is how leases are recorded or not, as debt. Currently companies can keep their lease obligations off their books as long as they are considered an Operating Lease. Operating leases while an operating expense on the income statement does not affect the balance sheet. The concept is that the Landlord, Lessor, transfers the use but not the ownership rights. Accounting rule makers consider this misleading since the lease payment is an obligation that remains off the books. This proposed change would oblige a company to show real estate leases and some construction equipment on their balance sheets as a debt obligation except the shortest term leases.

This could change the leasing game in a very big way! 

Tags: lease changes, lease accounting, operating lease, FASB    

Posted: 4-05-2016 8:56AM EDT