Planon: Changing rules and getting your leases in order

The new rules for lease accounting will make a significant mark on the corporate world. In 2019 organisations which report under FASB or IFRS will have to show virtually all their leasing contracts in their balance sheets. Sounds logical?  Currently, only 15 per cent of the 3,000 billion euros of leasing currently appear on balance sheets worldwide, so the new rules will certainly have a significant impact…

Many organisations now use off-balance leasing contracts, including for major liabilities such as renting an office building. The premises and the rental liability are, however, not shown on the balance sheet, so that ratios appear to be more favourable. This will change with the new rules in 2019, but large organisations will already need to introduce these drastic changes now.

Accounting firm PWC has calculated what the introduction of the new rules means right now. In the retail sector, debt on the balance sheet would double; for instance, solvency would drop from 41 to 27 per cent, and the debt ratio would rise from 1.1 to 2.5 times the operating result.

A threat? In fact I would regard it as an opportunity, certainly for property managers. It will become more relevant to consider your real estate critically and to apply alternative concepts, for example by reducing the quantity of property and by enhancing its flexibility…

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New lease accounting standard brings compliance concerns

The plot thickens for public companies learning the ins and outs of the brand new accounting standard that brings leases on to corporate balance sheets, as they now face a long list of implementation decisions and business implications.

Accounting experts say they don’t expect any significant pushback on the requirements of the standard or the effective date, which is 2019 for public companies, so they are urging companies to move forward with preparing for the standard. “There’s a fair amount of both challenge and opportunity with this standard,” says Anastasia Economos, a partner with EY…

The Big 4 accounting firms PwC, KPMG, Deloitte, and EY want companies to take advantage of their lease accounting resources…




  • Join Deloitte for a 90-minute Dbriefs webcast on Tuesday, March 15, 2016, at 2:00 p.m. Eastern to learn about FASB’s new lease accounting guidance and the associated implementation challenges. Earn up to 1.5 Intermediate CPE credits for attending. Learn more and register now.
  • Read Deloitte’s Heads Up publication for a comprehensive summary.


[Admin: This post is related to the 08.12.15 post about the KPMG Leasing Tool for IBM TRIRIGA.]

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