Proposed changes in leasing accounting standards are creating concerns among many businesses that use long-term leases, with 92 percent of executives in a new survey indicating they are unprepared to address the changes.
The new accounting standards from the Financial Accounting Standards Board and the International Accounting Standards Board would require a company’s leased assets—such as real estate, vehicles, equipment and IT systems—to be added to their balance sheet as a capital asset. Companies would have to list the value of their lease on the balance sheet. While the new standards are expected to be finalized later this year, both FASB and the IASB have not yet agreed on all the details (see FASB and IASB Part Ways on Leasing Standards).
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