Fixed asset accounting change would require substantial policy alterations for many companies
March 05, 2012
Companies that use long-term leases have expressed concern about potential changes in accounting standards that would require leased assets to be added to their balance sheet as a capital asset.
The changes, which would affect fixed assets
such as vehicles, equipment and real estate, were proposed by the Financial Accounting Standards Board and the International Accounting Standards Board. Currently, fixed asset
operating leases are included as part of an income statement.
Of the 179 senior executives from large global companies surveyed by IBM and CFO Research Services, 79 percent said the new legislation would require "moderate or substantial changes in their accounting policies, processes and practices," according to Accounting Today.
Additionally, 63 percent foresaw making necessary alterations to their information management systems and more than half (53 percent) anticipated having to adjust their related operational strategies for real estate.
The changes, which are expected to go into effect later this year, would have a significant effect. For example, S&P 500 companies would be weighed down by approximately $1 billion in new assets, according to an IBM statement.