The document discusses upcoming changes to lease accounting standards that will require companies to recognize operating leases on their balance sheets. Under the new standards, a right-of-use asset and lease liability will be recorded for operating leases based on the present value of lease payments. This will increase reported assets and liabilities for companies with many operating leases. It may also change key financial ratios like debt-to-equity and impact how leases are classified as operating or financing leases. Companies are advised to strategize with stakeholders and internal teams to prepare for the changes and potentially mitigate impacts to financial statements through lease negotiations.
An introduction to Aptitude Software.
Here we are providing a quick overview into what we do here at Aptitude Software. Includes case studies and examples of our past and present customers.
Le 13 janvier 2016, l’International Accounting Standards Board (IASB) a publié une nouvelle norme, IFRS 16, Contrats de location. Cette nouvelle norme permet la comptabilisation, par le preneur, de la plupart des contrats de location à l’état de la situation financière selon un modèle unique, faisant disparaître la distinction actuelle entre contrats de location-financement et contrats de location simple. Toutefois, le traitement comptable appliqué par le bailleur demeure essentiellement le même et la distinction entre contrats de location-financement et contrats de location simple reste inchangée.
L’IASB a publié la version définitive de la norme adoptant un modèle unique de comptabilisation par le preneur, alors que le FASB a préféré conserver le modèle double dans sa norme à venir. Toutefois, les deux normes exigent la comptabilisation des actifs et des passifs (à quelques exceptions limitées près).
An introduction to Aptitude Software.
Here we are providing a quick overview into what we do here at Aptitude Software. Includes case studies and examples of our past and present customers.
Le 13 janvier 2016, l’International Accounting Standards Board (IASB) a publié une nouvelle norme, IFRS 16, Contrats de location. Cette nouvelle norme permet la comptabilisation, par le preneur, de la plupart des contrats de location à l’état de la situation financière selon un modèle unique, faisant disparaître la distinction actuelle entre contrats de location-financement et contrats de location simple. Toutefois, le traitement comptable appliqué par le bailleur demeure essentiellement le même et la distinction entre contrats de location-financement et contrats de location simple reste inchangée.
L’IASB a publié la version définitive de la norme adoptant un modèle unique de comptabilisation par le preneur, alors que le FASB a préféré conserver le modèle double dans sa norme à venir. Toutefois, les deux normes exigent la comptabilisation des actifs et des passifs (à quelques exceptions limitées près).
PMC - THE ENERGY SAVING SOLUTIONS IN OFFICE BUILDINGS’ MANAGEMENT AND OPERATIONPMC WEB
PMC awares that by reducing energy consumption, we contribute to the
sustainable future of each client, partner, employee, community and to our
environment.
In each project managed by PMC, technologies and standard processes are
effectively applied to reduce water and electricity consumption, minimize
waste release to the environment and enhance efficient use of natural energy
sources.
Soft4Leasing - Software for lending and asset finance companies. Obtain opera...Soft4
Soft4Leasing is business software for lending and asset finance companies. The software
is tailored for the leasing business process and adaptable to the unique needs of your
company, helping you obtain operational excellence, reduce risks, support compliance
and promote growth throughout your company. Soft4Leasing is built on the Microsoft
Dynamics NAV platform and thus allows you to enjoy all the advantages of a world-class
ERP system.
The Future of Finance Function 2016 survey sponsored by Aptitude Software.
An insight into the changing role of the CFO and what can be done to ease the transition.
Aptitude Software discuss trends and challenges as telcos in Europe move closer to compliance with IFRS 15 regulations. The accompanying webinar is available on request from patrick.youngs@aptitudesoftware.com
My goal today is to inspire you to make a strong business case for applying big data in your enterprise, a key part of which is taking big data beyond analytics.
IFRS 16 Leasing with SAP Real Estate ManagementTobias Decker
The Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB) recently announced the release of new accounting standards that define how organizations must account for leases. Essentially, these accounting standards stipulate most leases must be reported on each company’s balance sheet, increasing the risk of regulatory noncompliance and inaccurate statutory reporting.
SAP Real Estate Management is used to optimize the portfolio of global assets and supports the regulatory compliance of these new accounting rules. This solution provides a single point of entry for collection, validation of lease contract data, performs valuation calculations and generates the financial postings derived from these calculations.
Lease Accounting: Preparing Your Business for 2022Citrin Cooperman
Making a smooth transition to the new lease accounting standards and putting new practices in place for the future is a top priority for any business as they plan for 2022. During this webinar session, we reviewed how you can handle and prepare to navigate your business through the new lease accounting standards.
Topics included:
- What private companies should think about for 2022
- How the lease accounting standards can impact your financial
statements, financial covenants, and taxes
- Identifying opportunities for your business due to the new lease
accounting standards
Preparing for the new lease accounting standard can seem like a daunting task. In this webinar, we reviewed how you can handle and prepare to navigate your business through the new lease accounting standard in 2022.
January 2011 A&A update from Frazier & Deeter, LLCbgodshall
We recently delivered this slide deck to clients and associates of Frazier & Deeter concerning recent developments with proposed convergence accounting standards. These standards are linked to IFRS, but will be effective for all US GAAP entities, regardless of status of IFRS in the US.
Subscribed 2017 - Workshop: ASC 606 Application For Subscription CompaniesZuora, Inc.
An interactive, 3-hour workshop covering insights, emerging interpretations and real-life examples pertinent to the Subscription Economy’s adoption of ASC 606. Designed for revenue analysts, controllers, accounting managers at SaaS/Cloud or Software companies, topics will include applying the series guidance, volume based fees, standalone selling prices, allocation practicalities, service add-ons and pricing changes, early renewals, and more. It will also include comparison with the current revenue practices. Seats are limited. Attendees received 3 CPE credits. You must register by June 1st. (A Full-Access Pass is required to attend).
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In order to inform you of the upcoming changes in lease accounting and the impact on IFRS reporting for fleets, LeasePlan’s Head of Consultancy Matthew Walters answers the most important questions on this topic in the below Q&A.
For years, lease accounting has been criticized as a means of structuring off-balance sheet financing, particularly as it related to the airline industry. In response to this feedback, the Financial Accounting Standards Board (FASB) and International Accounting Standards Board (IASB) initiated a joint project to overhaul accounting for leases in 2008, which was one of the cornerstone projects of a path towards convergence.
The FASB issued an exposure draft in 2010, but it received such heavy criticism from multiple parties that it didn't issue the final standard until early 2016. Accounting Standards Update 2016-02, Leases (ASC Topic 842) may be cumbersome to implement as it affects all leases (i.e. property, equipment, copiers) with only a few, minor scope exceptions. It also removes any differences between leases of equipment and real estate that exist in today's U.S. generally accepted accounting principles (GAAP).
McKonly & Asbury’s April webinar entitled, “Leasing: A New Standard is Finally Here” is hosted by Dan Sturm, Partner; Brett Bauer, Senior Manager; and Tim Showers, Supervisor. During this webinar, attendees will learn how ASC 842 differs from ASC 840; will see illustrative financial statements which highlight exactly what changes as a result of the new standard; and will gain an understanding of what they should be doing now to prepare.
PMC - THE ENERGY SAVING SOLUTIONS IN OFFICE BUILDINGS’ MANAGEMENT AND OPERATIONPMC WEB
PMC awares that by reducing energy consumption, we contribute to the
sustainable future of each client, partner, employee, community and to our
environment.
In each project managed by PMC, technologies and standard processes are
effectively applied to reduce water and electricity consumption, minimize
waste release to the environment and enhance efficient use of natural energy
sources.
Soft4Leasing - Software for lending and asset finance companies. Obtain opera...Soft4
Soft4Leasing is business software for lending and asset finance companies. The software
is tailored for the leasing business process and adaptable to the unique needs of your
company, helping you obtain operational excellence, reduce risks, support compliance
and promote growth throughout your company. Soft4Leasing is built on the Microsoft
Dynamics NAV platform and thus allows you to enjoy all the advantages of a world-class
ERP system.
The Future of Finance Function 2016 survey sponsored by Aptitude Software.
An insight into the changing role of the CFO and what can be done to ease the transition.
Aptitude Software discuss trends and challenges as telcos in Europe move closer to compliance with IFRS 15 regulations. The accompanying webinar is available on request from patrick.youngs@aptitudesoftware.com
My goal today is to inspire you to make a strong business case for applying big data in your enterprise, a key part of which is taking big data beyond analytics.
IFRS 16 Leasing with SAP Real Estate ManagementTobias Decker
The Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB) recently announced the release of new accounting standards that define how organizations must account for leases. Essentially, these accounting standards stipulate most leases must be reported on each company’s balance sheet, increasing the risk of regulatory noncompliance and inaccurate statutory reporting.
SAP Real Estate Management is used to optimize the portfolio of global assets and supports the regulatory compliance of these new accounting rules. This solution provides a single point of entry for collection, validation of lease contract data, performs valuation calculations and generates the financial postings derived from these calculations.
Lease Accounting: Preparing Your Business for 2022Citrin Cooperman
Making a smooth transition to the new lease accounting standards and putting new practices in place for the future is a top priority for any business as they plan for 2022. During this webinar session, we reviewed how you can handle and prepare to navigate your business through the new lease accounting standards.
Topics included:
- What private companies should think about for 2022
- How the lease accounting standards can impact your financial
statements, financial covenants, and taxes
- Identifying opportunities for your business due to the new lease
accounting standards
Preparing for the new lease accounting standard can seem like a daunting task. In this webinar, we reviewed how you can handle and prepare to navigate your business through the new lease accounting standard in 2022.
January 2011 A&A update from Frazier & Deeter, LLCbgodshall
We recently delivered this slide deck to clients and associates of Frazier & Deeter concerning recent developments with proposed convergence accounting standards. These standards are linked to IFRS, but will be effective for all US GAAP entities, regardless of status of IFRS in the US.
Subscribed 2017 - Workshop: ASC 606 Application For Subscription CompaniesZuora, Inc.
An interactive, 3-hour workshop covering insights, emerging interpretations and real-life examples pertinent to the Subscription Economy’s adoption of ASC 606. Designed for revenue analysts, controllers, accounting managers at SaaS/Cloud or Software companies, topics will include applying the series guidance, volume based fees, standalone selling prices, allocation practicalities, service add-ons and pricing changes, early renewals, and more. It will also include comparison with the current revenue practices. Seats are limited. Attendees received 3 CPE credits. You must register by June 1st. (A Full-Access Pass is required to attend).
The information being shared in this session is not a The information being shared in this session is not a The information being shared in this session is not a The information being shared in this session is not a The information being shared in this session is not a The information being shared in this session is not a The information being shared in this session is not a The information being shared in this session is not a The information being shared in this session is not a The information being shared in this session is not a The information being shared in this session is not a The information being shared in this session is not a The information being shared in this session is not a The information being shared in this session is not a The information being shared in this session is not a The information being shared in this session is not a The information being shared in this session is not a legal consultation. Any opinion expressed by the legal consultation. Any opinion expressed by the legal consultation. Any opinion expressed by the legal consultation. Any opinion expressed by the legal consultation. Any opinion expressed by the legal consultation. Any opinion expressed by the legal consultation. Any opinion expressed by the legal consultation. Any opinion expressed by the legal consultation. Any opinion expressed by the legal consultation. Any opinion expressed by the legal consultation. Any opinion expressed by the legal consultation. Any opinion expressed by the legal consultation. Any opinion expressed by the legal consultation. Any opinion expressed by the legal consultation. Any opinion expressed by the legal consultation. Any opinion expressed by the legal consultation. Any opinion expressed by the presenter is that individual’s view and may not be presenter is that individual’s view and may not be presenter is that individual’s view and may not be presenter is that individual’s view and may not be presenter is that individual’s view and may not be presenter is that individual’s view and may not be presenter is that individual’s view and may not be presenter is that individual’s view and may not be presenter is that individual’s view and may not be presenter is that individual’s view and may not be presenter is that individual’s view and may not be presenter is that individual’s view and may not be presenter is that individual’s view and may not be presenter is that individual’s view and may not be presenter is that individual’s view and may not be presenter is that individual’s view and may not be referred to the ICAPreferred to the ICAPreferred to the ICAPreferred to the ICAP referred to the ICAP referred to the ICAPreferred to the ICAP referred to the ICAP
In order to inform you of the upcoming changes in lease accounting and the impact on IFRS reporting for fleets, LeasePlan’s Head of Consultancy Matthew Walters answers the most important questions on this topic in the below Q&A.
For years, lease accounting has been criticized as a means of structuring off-balance sheet financing, particularly as it related to the airline industry. In response to this feedback, the Financial Accounting Standards Board (FASB) and International Accounting Standards Board (IASB) initiated a joint project to overhaul accounting for leases in 2008, which was one of the cornerstone projects of a path towards convergence.
The FASB issued an exposure draft in 2010, but it received such heavy criticism from multiple parties that it didn't issue the final standard until early 2016. Accounting Standards Update 2016-02, Leases (ASC Topic 842) may be cumbersome to implement as it affects all leases (i.e. property, equipment, copiers) with only a few, minor scope exceptions. It also removes any differences between leases of equipment and real estate that exist in today's U.S. generally accepted accounting principles (GAAP).
McKonly & Asbury’s April webinar entitled, “Leasing: A New Standard is Finally Here” is hosted by Dan Sturm, Partner; Brett Bauer, Senior Manager; and Tim Showers, Supervisor. During this webinar, attendees will learn how ASC 842 differs from ASC 840; will see illustrative financial statements which highlight exactly what changes as a result of the new standard; and will gain an understanding of what they should be doing now to prepare.
Insight into the changes in financial reporting requirements
Highlighting current hot topics
Providing you with practical application of these changes
Showing you how to address these issues holistically in the “real-world” context
Discuss the issues in the context of implementation issues and hurdles
Keep up to date & improve your reporting skills
It can be difficult to stay up to date on current accounting rules and regulations for businesses and not-for-profit organizations. This presentation discusses changes that may affect your organization and how to apply the most recent FASB standards and guidance.
Intacct can help you master your transition to ASC-606 and IFRS-15. If spreadsheets are part of your revenue recognition and billing processes, you are headed into a “perfect storm” of regulatory change. To adopt these new guidelines, you need a financial system that’s supports this critical transition.
Learn how Intacct's best-in-class cloud ERP solution can improve your transition by:
--Automating the dual reporting that's necessary to both stay compliant and understand the impact of the changes on your results
--Tracking performance obligations even as your billing, packaging, and pricing models evolve
--Addressing all the new rules for revenue reallocation and expense amortization with automation, not spreadsheets
A Call to Action CPAs - Confronting the Lease Accounting Changes - iLease Man...jmeedzan
iLease Management LLC has been providing insightful research and recommended approaches into the proposed lease accounting changes for over two years. This presentation dives into not only how the proposed FASB and IASB lease accounting changes will impact organizations but shows how, at the functional level, what questions need to be considered in order to comply with these upcoming standard changes. We outline the functional areas like Corporate, Finance, Treasury, Human Resource and Technology. And given the resource limitations within most organizations, we show how the lease accounting changes will present “Opportunities for Assistance” for Certified Public Accountants (“CPAs”) that are looking for ways to add value to their client relationships.
This presentation explains how CPAs can position themselves to be proactive and provide technology and services that are of critical importance to their clients.
Similar to Carole McNees Luncheon Presentation - October 12, University Club (20)
Implicitly or explicitly all competing businesses employ a strategy to select a mix
of marketing resources. Formulating such competitive strategies fundamentally
involves recognizing relationships between elements of the marketing mix (e.g.,
price and product quality), as well as assessing competitive and market conditions
(i.e., industry structure in the language of economics).
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RMD24 | Retail media: hoe zet je dit in als je geen AH of Unilever bent? Heid...BBPMedia1
Grote partijen zijn al een tijdje onderweg met retail media. Ondertussen worden in dit domein ook de kansen zichtbaar voor andere spelers in de markt. Maar met die kansen ontstaan ook vragen: Zelf retail media worden of erop adverteren? In welke fase van de funnel past het en hoe integreer je het in een mediaplan? Wat is nu precies het verschil met marketplaces en Programmatic ads? In dit half uur beslechten we de dilemma's en krijg je antwoorden op wanneer het voor jou tijd is om de volgende stap te zetten.
LA HUG - Video Testimonials with Chynna Morgan - June 2024Lital Barkan
Have you ever heard that user-generated content or video testimonials can take your brand to the next level? We will explore how you can effectively use video testimonials to leverage and boost your sales, content strategy, and increase your CRM data.🤯
We will dig deeper into:
1. How to capture video testimonials that convert from your audience 🎥
2. How to leverage your testimonials to boost your sales 💲
3. How you can capture more CRM data to understand your audience better through video testimonials. 📊
Discover the innovative and creative projects that highlight my journey throu...dylandmeas
Discover the innovative and creative projects that highlight my journey through Full Sail University. Below, you’ll find a collection of my work showcasing my skills and expertise in digital marketing, event planning, and media production.
Falcon stands out as a top-tier P2P Invoice Discounting platform in India, bridging esteemed blue-chip companies and eager investors. Our goal is to transform the investment landscape in India by establishing a comprehensive destination for borrowers and investors with diverse profiles and needs, all while minimizing risk. What sets Falcon apart is the elimination of intermediaries such as commercial banks and depository institutions, allowing investors to enjoy higher yields.
Putting the SPARK into Virtual Training.pptxCynthia Clay
This 60-minute webinar, sponsored by Adobe, was delivered for the Training Mag Network. It explored the five elements of SPARK: Storytelling, Purpose, Action, Relationships, and Kudos. Knowing how to tell a well-structured story is key to building long-term memory. Stating a clear purpose that doesn't take away from the discovery learning process is critical. Ensuring that people move from theory to practical application is imperative. Creating strong social learning is the key to commitment and engagement. Validating and affirming participants' comments is the way to create a positive learning environment.
[Note: This is a partial preview. To download this presentation, visit:
https://www.oeconsulting.com.sg/training-presentations]
Sustainability has become an increasingly critical topic as the world recognizes the need to protect our planet and its resources for future generations. Sustainability means meeting our current needs without compromising the ability of future generations to meet theirs. It involves long-term planning and consideration of the consequences of our actions. The goal is to create strategies that ensure the long-term viability of People, Planet, and Profit.
Leading companies such as Nike, Toyota, and Siemens are prioritizing sustainable innovation in their business models, setting an example for others to follow. In this Sustainability training presentation, you will learn key concepts, principles, and practices of sustainability applicable across industries. This training aims to create awareness and educate employees, senior executives, consultants, and other key stakeholders, including investors, policymakers, and supply chain partners, on the importance and implementation of sustainability.
LEARNING OBJECTIVES
1. Develop a comprehensive understanding of the fundamental principles and concepts that form the foundation of sustainability within corporate environments.
2. Explore the sustainability implementation model, focusing on effective measures and reporting strategies to track and communicate sustainability efforts.
3. Identify and define best practices and critical success factors essential for achieving sustainability goals within organizations.
CONTENTS
1. Introduction and Key Concepts of Sustainability
2. Principles and Practices of Sustainability
3. Measures and Reporting in Sustainability
4. Sustainability Implementation & Best Practices
To download the complete presentation, visit: https://www.oeconsulting.com.sg/training-presentations
Personal Brand Statement:
As an Army veteran dedicated to lifelong learning, I bring a disciplined, strategic mindset to my pursuits. I am constantly expanding my knowledge to innovate and lead effectively. My journey is driven by a commitment to excellence, and to make a meaningful impact in the world.
What is the TDS Return Filing Due Date for FY 2024-25.pdfseoforlegalpillers
It is crucial for the taxpayers to understand about the TDS Return Filing Due Date, so that they can fulfill your TDS obligations efficiently. Taxpayers can avoid penalties by sticking to the deadlines and by accurate filing of TDS. Timely filing of TDS will make sure about the availability of tax credits. You can also seek the professional guidance of experts like Legal Pillers for timely filing of the TDS Return.
Premium MEAN Stack Development Solutions for Modern BusinessesSynapseIndia
Stay ahead of the curve with our premium MEAN Stack Development Solutions. Our expert developers utilize MongoDB, Express.js, AngularJS, and Node.js to create modern and responsive web applications. Trust us for cutting-edge solutions that drive your business growth and success.
Know more: https://www.synapseindia.com/technology/mean-stack-development-company.html
Memorandum Of Association Constitution of Company.pptseri bangash
www.seribangash.com
A Memorandum of Association (MOA) is a legal document that outlines the fundamental principles and objectives upon which a company operates. It serves as the company's charter or constitution and defines the scope of its activities. Here's a detailed note on the MOA:
Contents of Memorandum of Association:
Name Clause: This clause states the name of the company, which should end with words like "Limited" or "Ltd." for a public limited company and "Private Limited" or "Pvt. Ltd." for a private limited company.
https://seribangash.com/article-of-association-is-legal-doc-of-company/
Registered Office Clause: It specifies the location where the company's registered office is situated. This office is where all official communications and notices are sent.
Objective Clause: This clause delineates the main objectives for which the company is formed. It's important to define these objectives clearly, as the company cannot undertake activities beyond those mentioned in this clause.
www.seribangash.com
Liability Clause: It outlines the extent of liability of the company's members. In the case of companies limited by shares, the liability of members is limited to the amount unpaid on their shares. For companies limited by guarantee, members' liability is limited to the amount they undertake to contribute if the company is wound up.
https://seribangash.com/promotors-is-person-conceived-formation-company/
Capital Clause: This clause specifies the authorized capital of the company, i.e., the maximum amount of share capital the company is authorized to issue. It also mentions the division of this capital into shares and their respective nominal value.
Association Clause: It simply states that the subscribers wish to form a company and agree to become members of it, in accordance with the terms of the MOA.
Importance of Memorandum of Association:
Legal Requirement: The MOA is a legal requirement for the formation of a company. It must be filed with the Registrar of Companies during the incorporation process.
Constitutional Document: It serves as the company's constitutional document, defining its scope, powers, and limitations.
Protection of Members: It protects the interests of the company's members by clearly defining the objectives and limiting their liability.
External Communication: It provides clarity to external parties, such as investors, creditors, and regulatory authorities, regarding the company's objectives and powers.
https://seribangash.com/difference-public-and-private-company-law/
Binding Authority: The company and its members are bound by the provisions of the MOA. Any action taken beyond its scope may be considered ultra vires (beyond the powers) of the company and therefore void.
Amendment of MOA:
While the MOA lays down the company's fundamental principles, it is not entirely immutable. It can be amended, but only under specific circumstances and in compliance with legal procedures. Amendments typically require shareholder
4. plantemoran.com 4
What you need to know
• Impact on balance sheet
• Impact on income statement
Strategies
Changes are Coming…
5. plantemoran.com 5
Leases are going on the balance sheet
* Of course, it is a little more complicated
Big picture – What’s Changing?
6. plantemoran.com 6
Joint project with IASB – but not complete convergence
Effective Dates:
Fiscal years beginning after December 15, 2018 for PUBLIC (calendar yr 2019)
Fiscal years beginning after December 15, 2019 for NONPUBLIC (calendar yr 2020)
Scope:
Leases <12 months scoped out
Does the contract convey the right to control use of a specified asset
Must be applied to all leases in place upon implementation (nothing is “grandfathered”)
ASU 2016-02
7. plantemoran.com 7
Balance sheet –
Asset representing the right to use the leased asset for the
lease term – (Valued initially at the present value of the lease
payments)
Liability to make lease payments – (Also valued initially at the
present value of the lease payments)
Lessee Accounting
8. plantemoran.com 8
Lease term = 10 years
Rent = $4 psf, 500,000 sq ft; Annual rent = $2 million
Discount rate = 6%
Calculated present value = approx. $15 million
Lessee Accounting - Example
Debit Credit
Right-of-use Asset $15,000,000
Lease Obligation Payable $15,000,000
Journal entry at lease inception:
9. plantemoran.com 9
Before
Implementation
Adjust for
Leases Adjusted
Current assets 90,000,000 90,000,000
Noncurrent assets 40,000,000 15,000,000 55,000,000
Total assets 130,000,000 15,000,000 145,000,000
Current liabilities 45,000,000 1,100,000 46,100,000
Noncurrent liabilities 45,000,000 13,900,000 58,900,000
Total liabilities 90,000,000 15,000,000 105,000,000
Equity 30,000,000 30,000,000
Lessee Balance Sheet Impact - Example
Current ratio 2.00 1.95
Debt to equity 3.00 3.50
10. plantemoran.com 10
Income statement effect will be based on either:
• Amortization & interest expense (financing approach)
• Straight-line lease expense (operating lease approach)
Income statement
11. plantemoran.com 11
If any of these exist, it is financing:
• Ownership transfer
• Option to purchase, reasonably certain to exercise
• Lease term for “major part” of economic life
• PV of payments equals or exceeds “substantially all” of the fair value
Just like today’s capital versus operating test, EXCEPT:
• No more clear, specific, bright-line tests – have to (or get to) apply judgment
Financing versus Operating
13. plantemoran.com 13
Operating –
10 yr term
Financing –
20 yr term Difference
Gross Profit* 43,000,000 43,000,000 ---
Operating Expenses* 20,000,000 18,000,000 2,000,000
EBITDA 23,000,000 25,000,000 2,000,000
Interest, Depreciation,
Amortization 10,000,000 12,600,000 2,600,000
Pre-tax Income 13,000,000 12,400,000 (600,000)
*Excludes any interest, depreciation or amortization
Lessee Income Statement Impact –
Example (Year 1 only)
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Before
Implementation
Adjusted – 10
year lease
Adjusted – 20
year lease
Current assets 90,000,000 90,000,000 90,000,000
Noncurrent assets 40,000,000 55,000,000 63,300,000
Total assets 130,000,000 145,000,000 153,300,000
Current liabilities 45,000,000 46,100,000 46,400,000
Noncurrent liabilities 45,000,000 58,900,000 66,900,000
Total liabilities 90,000,000 105,000,000 113,300,000
Equity 30,000,000 30,000,000 30,000,000
Lessee Balance Sheet Impact - Example
Current ratio 2.00 1.95 1.94
Debt to equity 3.00 3.50 3.77
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Complicating factors:
• Variable payments
• Discount rate
• Lease modifications
• Impairment
• Other services included in contract (ex. CAM)
• Multiple assets included in lease contract
• Sale leaseback
• Build to suit arrangements
Leases
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Are there financial reporting objectives?
• Minimize balance sheet impact
o Shorter term leases
o Net leases
• Maximize EBITDA
o Financing-type leases – generally longer term
o Gross leases
Strategies
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Proactively negotiate with FS users (if possible)
• Re-set covenants or other financial measurements
• Message: Nothing has fundamentally changed with the
financial stability of the company
Strategies
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1. Leases are going on the balance sheet
2. Understand the impact on so you can proactively prepare the
users of financial statements
3. Collaboration and communication between internal
departments (accounting, finance, operations, real estate)
4. Don’t let the tail wag the dog – still need to make good
business decisions
5. Employ strategies in lease negotiation to drive financial
statement outcome, if possible
Lease Accounting Changes – 5 Key
Takeaways
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Thank you for participating in our discussion.
Carole McNees, CPA
Partner, Plante & Moran, PLLC
Industry Technical Leader for Real Estate & Construction Industry
carole.mcnees@plantemoran.com
Brian Greko, CPA
Associate, Plante & Moran, PLLC
brian.greko@plantemoran.com
Thank You
