Lease Accelerator Lease Accounting & Compliance

Top Business Risks

With these new assets and liabilities, financial metrics such as return on assets, EBITDA, and operating leverage could change significantly for some companies. How will shareholders, bondholders, lenders, and credit rating agencies respond to these changes? Will these new liabilities on the balance sheet impact corporations’ ability to borrow money or their existing debt covenants?  Will these accounting changes impact market capitalization or stock price?

Read about the Top 10 Lease Accounting Business Impacts and Risks.
Lease Accelerator Reporting

Financial Statement Impacts

With the introduction of the new lease accounting standards, several trillion dollars worth of assets and liabilities will transfer onto corporate balance sheets over the coming years. How will those new assets and liabilities impact the financial metrics that institutional and retail investors use to evaluate the financial performance of publicly traded companies? How will these new accounting rules impact asset turnover, return on assets, and quick ratio?

How 18 Common Financial Metrics are impacted.

Listed companies using IFRS Standards or US GAAP are estimated to have around US$3.3 trillion of lease commitments; over 85 per cent of which do not appear on their balance sheets.

International Accounting Standards Board

Our research shows that the average company will see a 13% increase in EBITDA and a 22% increase in interest-bearing debt...the average expected increases for retail business are 41% and 98% respectively.

James Chalmers, PwC’s UK assurance leader

These new accounting requirements bring lease accounting into the 21st century, ending the guesswork involved when calculating a company’s often-substantial lease obligations.

Hans Hoogervorst, IASB Chairman
Lease Administration Strategy

Research Studies – Is the Market Ready?

Since the publication of the new lease accounting standards in early 2016, there have been a number of excellent recent studies conducted by Big Four firms such as KPMG, real estate brokers such as CBRE, and industry associations such as FERF. These research studies attempt to quantify the composition of corporate leasing portfolios as well as the lease accounting business impacts expected by chief financial officers and chief accounting officers.

Read the Latest Lease Accounting Research Studies.
Data Search

Fortune 1000 – Who is Most Impacted?

According to the International Accounting Standards Board (IASB), listed companies are estimated to have around $3.3 trillion of leasing commitments, over 85 percent of which are off balance sheet. Leasing obligations for a specific company can range from a few million dollars (on the low end) to tens of billions of dollars (on the high end). For example, Walgreens and AT&T each have over $30 billion in operating leasing obligations, while Hershey and Harley Davidson each have only a little more than $50 million in operating leases.

List of the Fortune 1000 Companies with Highest Lease Accounting Business Impacts.

Next: Who needs to Participate?

Learn How to Identify a Leader and Project Team for Lease Accounting