The new international lease accounting rules are causing some CFOs to reconstruct how they gauge corporate performance. Previous rules allowed some leases to be recorded in footnotes to financial statements. CFOs must now report leases on the balance sheet as assets and liabilities. Rather than recording lease payments as operating expenses, companies now need to record them as depreciation and interest charges.
This article discusses the challenges that come with this change, in particular to the investors who are married to the current metrics used to compare company performance.
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