AFLA Conference Archives-Deconstructing the Lease

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Video Summary

The speaker discusses various aspects of lease accounting, focusing on track leases and their benefits and limitations. Track leases are popular due to the cash flow benefits, tax advantages, and asset management flexibility they offer. Leasing can be more beneficial than loans, as it often results in lower payments, freeing up cash for other business needs. Track leases, in particular, provide flexibility by allowing lessees to control the economic outcomes based on how they manage residual value risks. Various types of leases, including synthetic and leverage leases, were also mentioned, but the focus remained primarily on track leases.<br /><br />The presentation highlights how changes in lease accounting rules might impact how leases are documented and recognized on balance sheets. Under current rules, many track leases are classified on balance sheets, but future accounting changes could alter these classifications, especially how the expected performance under a lease can affect financial reporting. Prospective changes include a shift toward more principle-based accounting from rules-based, affecting both U.S. and international accounting standards.<br /><br />The speaker also touches on ongoing issues like interim rent and prospective changes like tax reform, which may alter lease-buy decisions. With the proposed tax reforms allowing for immediate asset write-offs, leasing practices might be impacted. The presentation concludes by suggesting that companies must prepare for these evolving dynamics in lease accounting and tax regulations.

Asset Subtitle

Shawn Halladay

Meta Tag

Location Las Vegas, NV

Year 2017

Keywords

lease accounting

track leases

cash flow benefits

tax advantages

asset management

residual value risks

synthetic leases

leverage leases

accounting standards

tax reform

Las Vegas, NV

2017