The Potential Impact of Lease Accounting on Equity Valuation

Matthew A. Stallings

The Potential Impact of Lease Accounting on Equity Valuation

University of St. Thomas

Research output: Contribution to journal › Article › peer-review

Abstract

On February 25, 2016, FASB, in collaboration with the International Accounting Standards Board (IASB), released Accounting Standards Update (ASU) 2016-02, Leases (Topic 842) , in order to improve the financial reporting for lease transactions. Effective for U.S. GAAP public companies with fiscal years and interim periods beginning after December 15, 2018, the new guidance will require companies that lease property or equipment to recognize assets and liabilities on the balance sheet for all leases with terms greater than 12 months. The change is intended to increase the transparency and comparability of lease-related material previously relegated to the notes.

Original language	American English
Journal	The CPA Journal
State	Published - Nov 2017
Externally published	Yes

Keywords

cash flow
equity valuation
lease accounting

EGS Disciplines

Accounting

Cite this

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title = "The Potential Impact of Lease Accounting on Equity Valuation",

abstract = " On February 25, 2016, FASB, in collaboration with the International Accounting Standards Board (IASB), released Accounting Standards Update (ASU) 2016-02, Leases (Topic 842) , in order to improve the financial reporting for lease transactions. Effective for U.S. GAAP public companies with fiscal years and interim periods beginning after December 15, 2018, the new guidance will require companies that lease property or equipment to recognize assets and liabilities on the balance sheet for all leases with terms greater than 12 months. The change is intended to increase the transparency and comparability of lease-related material previously relegated to the notes. ",

keywords = "cash flow, equity valuation, lease accounting",

author = "Stallings, {Matthew A.}",

note = "presents the current year balance sheet, income statement, and additional financial information for a hypothetical business. When the company borrows money to purchase an asset, both the asset and associated debt appear on the balance sheet, and the company deducts the corresponding interest to determine net income.",

year = "2017",

month = nov,

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T1 - The Potential Impact of Lease Accounting on Equity Valuation

AU - Stallings, Matthew A.

N1 - presents the current year balance sheet, income statement, and additional financial information for a hypothetical business. When the company borrows money to purchase an asset, both the asset and associated debt appear on the balance sheet, and the company deducts the corresponding interest to determine net income.

PY - 2017/11

Y1 - 2017/11

N2 - On February 25, 2016, FASB, in collaboration with the International Accounting Standards Board (IASB), released Accounting Standards Update (ASU) 2016-02, Leases (Topic 842) , in order to improve the financial reporting for lease transactions. Effective for U.S. GAAP public companies with fiscal years and interim periods beginning after December 15, 2018, the new guidance will require companies that lease property or equipment to recognize assets and liabilities on the balance sheet for all leases with terms greater than 12 months. The change is intended to increase the transparency and comparability of lease-related material previously relegated to the notes.

AB - On February 25, 2016, FASB, in collaboration with the International Accounting Standards Board (IASB), released Accounting Standards Update (ASU) 2016-02, Leases (Topic 842) , in order to improve the financial reporting for lease transactions. Effective for U.S. GAAP public companies with fiscal years and interim periods beginning after December 15, 2018, the new guidance will require companies that lease property or equipment to recognize assets and liabilities on the balance sheet for all leases with terms greater than 12 months. The change is intended to increase the transparency and comparability of lease-related material previously relegated to the notes.

KW - cash flow

KW - equity valuation

KW - lease accounting

UR - https://www.cpajournal.com/2017/11/29/potential-impact-lease-accounting-equity-valuation/

M3 - Article

JO - The CPA Journal

JF - The CPA Journal

ER -

The Potential Impact of Lease Accounting on Equity Valuation

Abstract

Keywords

EGS Disciplines

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