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Will new lease accounting lead to less leasing?

Tammy Whitehouse | August 26, 2016

Accounting experts are beginning to discuss whether companies might change their leasing strategy when new accounting standards take effect requiring leases to be reflected on corporate balance sheets.

An association of accountants in Australia is pondering whether companies will look to structure lease arrangements to take advantage of exceptions from balance sheet recognition under International Financial Reporting Standards. Short-term leases and low-value leases are both excluded from the scope of the new lease accounting standard under IFRS, wrote Alex Malley, chief executive of CPA Australia.

“It is suggested that companies may seek to structure their lease arrangements to take advantage of these exemptions,” wrote Malley. He’s not advocating that approach, and he also cautioned the standard has “a number of in-...

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