Page 20: of Marine News Magazine (June 2016)

19 21

FINANCE “Because of the change, other than for short term leases, FASB will consider operating leases as capital leases and be reportable on a company’s balance sheet as such. Happily, this will not happen overnight.”

Under the FASB rules, the method of reporting for an ratios, pro? ts and possibly call for the re-writing out-of- existing operating lease will also change and be subject to compliance covenants.

new US standards, which can be seen at: www.fasb.org. Bottom Line: If you prepare ? nancial reports for either domestically and internationally or both, there is a sea

MPLICATIONS FOR OU READY OR NOT

I Y : … change coming. Prepare yourself and your company by

What is the Upside? All the bene? ts of leasing will re- working with your accountant or ? nance professional to main the same, maintaining cash ? ow, preserving capital, understand, anticipate and implement how these report- avoiding obsolesce and enjoying the ? exibility of the lease ing changes will affect you and your future. to suit your needs. Depreciation of the asset and interest expense will be on the lessee’s balance sheet. Rent will no longer be deductible.

The author is a 30 year veteran of the commercial marine

Downside? It has been estimated that nearly a trillion industry and can be reached at [email protected]; or dollars in debt will migrate from the off-balance sheet to 516-395-1860.

on-balance sheet reporting. The change will affect debt

June 2016

MN 20

MN June16 Layout 18-31.indd 20 5/17/2016 11:02:14 AM