The upcoming changes to the Federal Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB) will dramtically change how leases are shown on an organization's balance sheet.
Long-term leases have often been an off-balance sheet item, and some argue it was a tool for corporations to hide what is essentially "debt" in the form of monthly payments to a landlord. The new regulations will require these leases to instead be shown on the balance sheet as a long-term liability which will instantly impact debt-to-equity ratios and could trigger default clauses in some corporate contracts. Despite the pain of transitioning to the new system, proponents of the new standards argue it will allow a higher level of corporate transparancy and accountability.
On June 14, 2011, Walter Clements, CRE, CCIM, FRICS, Director of the Lewis White Real Estate Center along with David Donnelly, PhD, Professor of Accountancy for UMKC will co-instruct a seminar geared towards informing real estate professionals to learn how to proactively prepare their clients for this upcoming change in accounting rules. More information can be found here: http://www.bloch.umkc.edu/centers-institutes/lewis-white-real-estate-center/online-registration/real-estate-leases/index.aspx
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