Lease accounting standard has been dramatically revised in recent years. The entities that play a role of a lessee have seen their price decline, mainly due to the recently effective FASB ASC 842. Read
Chap 15 Lease-Accounting Rules May Have Hurt Companies’ Valuations, Study Says – WSJ.pdf
from WSJ and answer the following questions:
- What authoritative requirements made “a recent change in how companies are expected to account for and report operating leases on company balance sheets”?
- What are operating leases? How are they shown on corporate balance sheets? Describe measuring an amount to be included on the balance sheet and the accounts that are affected.
- Consider your answer to the question above. How is it possible that accounting prior to the new lease accounting standard might not show leases on the balance sheet?