The Financial Accounting Standards Board has just released new regulations on the accounting of lease finance transactions.
According to Accounting Web, the new standards will affect those that lease equipment, and it will require companies that lease assets to show on their balance sheet “the assets and liabilities for the rights and obligations created by those leases.”
“Under the new FASB guidelines, companies are required to disclose lease obligations much like other liabilities. This is intended to increase visibility and transparency, so a company can be fairly evaluated by others,” said Mike Lockwood, President of TEQlease Capital. “We feel this should not impact the ability of our customers to lease or finance equipment.”
“The new guidance responds to requests from investors and other financial statement users for a more faithful representation of an organization’s leasing activities,” FASB Chairman Russell Golden said in a written statement. “It ends what the US Securities and Exchange Commission and other stakeholders have identified as one of the largest forms of off-balance-sheet accounting, while requiring more disclosures related to leasing transactions.
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