New Lease Accounting Standards

Beginning January 1, 2019, public companies have to begin disclosing the present value of lease of future lease payments as a liability on the balance sheet. Previously, many leases were kept off the balance sheet. The result will be that for companies that rely heavily on leases, the debt may increase dramatically. However, we would like to make an important point in that while the balance sheet debt will increase because of the new leasing accounting standards, it will only have a minimal, if any, effect on leasing cash flows, meaning that he NAL calculation we discuss is still the correct analysis to determine whether to lease or buy.