Wed, Jul 10, 2019

Implementing New Lease Accounting Guidance, and Effects on Comparability in M&A

For public and private companies considering an M&A transaction, new accounting lease guidelines will likely have a significant impact on the way in which assets and liabilities are reported within financial statements. The new accounting rules, enacted by the Financial Accounting Standards Board and the International Accounting Standards Board in early 2019, significantly change how leases are reported on corporate balance sheets, regardless of whether they are classified as finance or operating leases. This change could considerably affect a company’s leverage and liquidity ratios, opening the door for potential disagreements regarding the measurement of target and transferred working capital. 

In this Bloomberg Law article, Duff & Phelps Managing Directors Frank Lazzara and Seth Fliegler, as well as Director James Brennan explore the new guidelines and potential ramifications for companies entering into M&A transactions.

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