• Register
Return to: Home > News > Standards > Leases will be restructured to deal with accounting changes: Fitch

Leases will be restructured to deal with accounting changes: Fitch

Credit rating firm Fitch Ratings has predicted the proposed lease accounting changes will induce lessees to restructure the leases they sign up to.

The proposed standard, as published in the second exposure draft issued by the two standard-setters, the International Accounting Standards Board (IASB) and the US Financial Accounting Standards Board (FASB), requires leases of more than 12 months to be accounted on-balance sheet.

Fitch said it believes this will give "a better indication of the economic substance of leases" but may lead companies to restructure leases to circumvent the proposed rules.
The rating agency suggested companies might switch to short-term leases of less than 12 months or replace leases with "service contracts".

The original exposure draft was heavily criticised by the leasing industry in more than 800 comment letters to the two boards and the second draft has also met with criticism.

Fitch has published a report, New Global Proposals to Reshape Lease Accounting, outlining how it will approach the proposed changes in its analysis.

Related stories

IASB, FASB to re-expose leasing proposals

FASB and IASB 'disagree' on leasing standards

Top Content

    Choosing the right location can have cast-iron benefits

    As Game of Thrones, one of the biggest television shows of all time, comes to an end, Joe Pickard looks at how tax incentives offered to television and film production companies help the wider economy.

    read more

    Primary financial statements: a game changer in reporting?

    International Accounting Standards Board chair Hans Hoogervorst delivered a speech at the Seminario International sobre NIIF y NIF, organised by the Consejo Mexicano de Normas de Información Financiera in Mexico. The Accountant presents the highlights.

    read more

    FASB readies standards for the netflix generation

    The US Financial Accounting Standards Board (FASB) has updated its accounting standard for entertainment, with a specific eye on keeping up to date with how episodic content, such as television programmes, is consumed in the modern world. Jonathan Minter reports.

    read more

    Brexit: why it takes two to tango

    Former TA editor Vincent Huck, now editor of Insurance Asset Risk, looks at why Brexit might unleash geopolitical intrigue in Europe’s accounting standard-setting scene – and why IFRS 17 will be an incredible source of opportunity for firms in the coming years.

    read more
Privacy Policy

We have updated our privacy policy. In the latest update it explains what cookies are and how we use them on our site. To learn more about cookies and their benefits, please view our privacy policy. Please be aware that parts of this site will not function correctly if you disable cookies. By continuing to use this site, you consent to our use of cookies in accordance with our privacy policy unless you have disabled them.