Annual Lease Accounting Rules Expect to Change Dramatically
The IASB’s New Proposals Will Impact Financial Figures
International accounting proposals associated with leasing are thought to soon be changing dramatically, and in turn, impacting the finances of firms all across the United Kingdom.
In a move to improve the level of transparency in the leasing industry, the International Accounting Standards Boards has recently created new proposals. If these are put into practice, then leases will begin to have a larger impact on the financial figures of a firm.
Firm’s Funding Agreements Could Be Affected
Firms may soon have to show the lease and the risk on the company’s balance sheet, which would contravene any existing funding agreements that they have. The reason why this is such a substantial decision is that the new international accounting standards are not just required by UK-only businesses, but are also used for large privately owned companies in the UK and PLCs.
A spokesman for the IASB has said that under existing accounting standards, a majority of leases are not reported on balance sheets.
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