In June of 1976, the Financial Accounting Standards Board (FASB) released FAS 13 - Accounting for Leases. After years of deliberation, in the first quarter of 2016, the FASB finalized changes to the accounting rules. The new rules will increase transparency in lease accounting by bringing operating leases onto the balance sheet.
Organizations will continue to receive the benefits of leasing, including lower monthly payments, thanks to the leasing company's residual investment. The present value of operating lease obligations will still be lower than the cost of buying the equipment outright. Technology exchange options and lease-based refresh programs remain as powerful financial tools to manage assets and avoid technological obsolescence.
This is for informational purposes only. Please consult your auditor for confirmation and discuss covenants with banks and creditors. First American does not provide tax, legal or accounting advice.