Primer: Assessing the Impact of the New FASB Lease Accounting Standards on the Value of Lease Obligations
David Kamen, Vice President, Global Portfolio Strategy, Global Workplace Solutions, Johnson Controls (Q1 / Winter 2013)

{{RELATEDLINKS}}When preparing for the Financial Accounting Standards Board (FASB) new lease accounting rules, companies must assess the impact of these standards on the value of the their lease obligations on a capitalized basis. This can be done by calculating the total cash payments of leases, any anticipatory changes in the total lease term length and the imputed interest expense, and then repaying the costs over the anticipated length of the lease. This process can be completed in the following six steps:

Once the final rules are announced this summer, there will not be a lot of time to prepare before they take effect in 2015 or 2016. Assessing the impact of the rule changes on the value of lease obligations on a capitalized basis is only one step that should be taken. To plan for the new lease accounting standards, companies should also consider the following tips....