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Proposed FASB Change Would Put Leases on Firm’s Balance Sheets

November 3, 2010

The Financial Accounting Standards Board is considering changing FAS 13 to require public companies to account for their leases on their balance sheets.

This would result in new liabilities on the balance sheet and amortization of leases throughout their duration.  The change would likely have a significant first-year impact since tenants would have to inventory their leases, their terms, and rent-payments. Given how non-public companies previously adopted requirements that are applicable to only public companies, such as Sarbanes-Oxley, it seems likely that the private sector would also begin adhering to this change.

Final adoption of the change could come as early as the second quarter of next year and is projected to become effective in either 2013 or 2014. 

This correspondence should not be construed as legal advice or legal opinion on any specific facts or circumstances. The contents are intended for general informational purposes only, and you are urged to consult a lawyer concerning your own situation and legal questions.
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