Overview
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Learn about how leases can affect your accounting practice, and explore the impact of the 2019 Financial Accounting Standards Board (FASB) lease rules.
Syllabus
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Introduction
- The importance of lease accounting
- Understanding leasing vs. buying
- Different ways to finance assets
- User/Customer/Lessee: Pros and cons of a lease
- Owner/Seller/Lessor: Pros and cons of a lease
- The FASB four criteria from 1976
- Implementation of the FASB four criteria
- U.S. GAAP vs. IFRS
- Continuing calls for change
- Leases within operating and finance structure
- Debt ratio and asset turnover ratio
- Implied value of assets used under operating lease contracts
- Adjusted debt ratio and asset turnover ratio
- Operating lease versus capital/finance lease
- Leasing example: Sir David Tweedie and airplanes
- The Gap: Debt ratio and asset turnover ratio
- The Gap: Estimated implied value of assets under lease contracts
- The Gap: Adjusted debt ratio and asset turnover ratio
- Will the new lease accounting rule end the world as we know it?
- Summary of the new lease accounting rule
- Simple numerical example of the new lease accounting rules
- How long have you been teaching the old rules?
- A sample of impacts of the new lease accounting rule
- Renegotiating loan agreements
- Educating financial analysts and the business press
- How can I get around the new rule?
- Yes, financing should be on the balance sheet
