Kathryn Fletcher, manager at Draffin & Tucker LLP, was quoted in the article, “Accounting For Change: Proposed Rules Will Alter Leases On Balance Sheets,” that appeared in the Sept. 7, 2012, issue of the Atlanta Business Chronicle.
Proposed changes to the accounting standard regarding the treatment of leases stand to affect the financial statements of businesses that lease any type of property, from office equipment to buildings, and everything in between. Kathryn says that the current lease accounting method has been criticized as being complex, omitting relevant information about rights and obligations, and providing a lack of comparability between companies.
The impacts of the proposed changes on companies will be a sudden increase in asset and liability balances on company financial statements as well as changes in financial ratios. Management should review current and potential future debt arrangements for covenant issues, and if applicable, begin pursuing amendment or waiver options to ensure the availability of financing opportunities when the proposed lease changes are implemented.
For more information on lease accounting changes, please contact Kathryn Fletcher at email@example.com.