By ASL Business Valuation Group
The new lease accounting guidance ASC 842 brings previously off-balance sheet operating leases onto a company’s balance sheet. They are now reflected as a “right-of-use” asset and as a corresponding operating lease liability. This can increase a company’s reported assets and liabilities, affecting key financial ratios. The income statement and the statement of cash flow are affected by a lesser degree than the balance sheet. Companies will continue to expense operating leases and the depreciation expense and interest expense may be higher for some companies. (more…)