LeaseAccelerator, the pioneer of the Enterprise Lease Accounting software category, announced today the release of its Who is Most Impacted by the New Lease Accounting Standards report, a ranking of the US public companies with the largest leasing obligations. The report includes total operating lease obligations for the 1000 largest U.S. public companies sourced from Fortune's 2018 Fortune 1000 report.
Starting in January 2019, a new set of lease accounting standards will begin to take effect, requiring US public companies to transfer an estimated $3 trillion of operating leases onto corporate balance sheets as right-of-use assets and corresponding lease liabilities. Historically, only a limited set of information about operating leases has been reported in the footnotes of SEC filings. However, under the new ASC 842 and IFRS 16 standards, companies will be required to add new line items to the balance sheet for these operating leases. As a result, key financial metrics, such as return on assets, asset turnover and the quick ratio will be impacted by these accounting changes.
Collectively, the top 1000 public companies in the US add up to $983 billion in operating lease liabilities. Although companies in every industry use leasing, there is a particularly high concentration of leases in the retail, airlines and telecommunications sectors. The retail industry will experience the greatest proportional balance sheet change from the new standards as specialty, grocery and food service chains tend to lease many of their brick and mortar store locations.
"With less than six months remaining until the initial deadlines for the new lease accounting standards, CFOs need to start developing strategies for communicating these balance sheet changes to their investor communities," said Michael Keeler, CEO of LeaseAccelerator. "We hope that this report will help companies understand and compare the level of impact they will experience from ASC 842 relative to their peer group."
Developed over a period of ten years by the Financial Accounting Standards Board (FASB) and International Accounting Standards Board (IASB), the new lease accounting standards change the way public companies will report leases in their quarterly and annual financial statements. Many real estate and equipment leases, previously only disclosed in the footnotes of investor filings will now be capitalized on corporate balance sheets. The IASB estimates that over $3 Trillion of assets and liabilities will transfer onto corporate balance sheets in the coming years. The implementation deadlines for the new standards start in 2019.
The report is accessible at:
https://www.leaseaccounting.com/fortune-1000-lease-accounting-ranking
The operating lease obligations and other figures used in the report were obtained from the financial and data analytics provider FactSet and corporate SEC filings.
About LeaseAccelerator LeaseAccelerator offers the market-leading software-as-a-service (SaaS) for Enterprise Lease Accounting, proven to be the simplest, fastest, easiest path to compliance with the new FASB and IFRS standards. Using LeaseAccelerator's unique Global Lease Accounting Engine, customers can apply the new standards to all types of leases – real estate, equipment and embedded – at the asset level as specified by FASB and IASB. The company's ecosystem of certified, global partners offers a variety of guaranteed turn-key solutions. On average, the firm's Sourcing and Management applications drive savings of 17 percent with smarter procurement and end-of-term management – compliance plus ROI. Visit http://www.leaseaccelerator.com/.
