Matt Shoemaker Featured in American Banker: What major change in lease accounting means for banks
What major change in lease accounting means for banks
Written by Andy Peters and Published originally in American Banker on December 11, 2018
Banks are bracing for the impact — on two fronts — of a new federal rule that will change how companies account for the cost of leasing everything from equipment to automobiles to space in office buildings or shopping centers.
Under the new rule, which takes effect for public firms on Jan. 1 and for private firms a year later, the Financial Accounting Standards Board will require companies to record operating leases as both liabilities and assets on their balance sheets. As it stands, these costs are kept off the balance sheet, leaving investors with an incomplete picture of a company’s financial obligations, according to FASB.
The change could affect banks in two big ways.