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SEC Filings Stress Balance Sheet Impact of New Lease Accounting Standards

April 18, 2018, 07:15 AM
Filed Under: Industry News

LeaseAccelerator announced the release of the first SAB 74 Disclosure Analysis for Lease Accounting report, an assessment of recent Securities and Exchange Commission filings related to the adoption of ASC 842. The report includes comments issued by the 100 U.S. companies with the largest dollar value of leasing obligations. Key findings include:

  • Material Impacts to Balance Sheets – 76 percent of the Top 100 reported that there will be a material impact resulting from the transfer of most right-of-use assets and liabilities on to corporate balance sheets. Another 20 percent are still analyzing the potential impacts of the new standard. Only 8 percent provided quantitative estimates of the material impact to the balance sheet, which ranged from $1.2 billion to $13 billion.
  • Impacts to Income Statement – 28 percent of the Top 100 reported that there will not be a material impact to their income statement from ASC 842. Another 66 percent are still analyzing the impacts.
  • New Policies and Controls –18 percent are evaluating or implementing new policies and controls to support the standard.
  • Lease Accounting Software – 18 percent are evaluating or have selected a lease accounting software application.
  • Project Teams – Only 13 percent indicated that a project team had been formed to address the new standard.

"As expected, the SAB 74 disclosures confirm that most companies are expecting a material impact to their balance sheets when they adopt ASC 842 and IFRS 16," said Michael Keeler, CEO of LeaseAccelerator. "However, the lack of implementation progress suggests there is still a long road to compliance for many large lessees, each of which will need to implement new Enterprise Lease Accounting systems, policies and controls."

The report can be viewed and downloaded here.

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