Lease accounting in industrial manufacturing: Transformational change

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06/27/2013 by Industrial products
Lease accounting in industrial manufacturing: Transformational change

At a glance

Proposed lease accounting changes will impact industrial manufacturing company financial and performance metrics such as EBITDA, net income, and cash flows from operations. Creating a catalog of all leasing arrangements will be help in evaluating the impact of the new standard.

Standard-setting boards are moving forward with a lease accounting overhaul that will bring substantially all leases onto the balance sheet of lessees and may change expense recognition. The proposed changes will impact many key financial and performance metrics such as EBITDA, net income, and cash flows from operations.

Creating a catalog of all leasing arrangements will be critical to evaluating the overall impact of the new standard. Changing accounting standards will have far-reaching impacts on your organization's business processes, systems, and controls. Companies should begin now to prepare, in a measured way, for the looming business process changes.

This spotlight paper considers the impact of the proposed new lease accounting guidance on lessees in the manufacturing industry.