Just in:
WHEN you lease something—a boat, a warehouse, a machine for making ball-bearings—you agree to pay for it bit by bit over time. So it is like incurring a debt, say the International Accounting Standards Board (IASB) and America’s Financial Accounting Standards Board (FASB). Therefore, it should be on your balance-sheet.
Ruh-roh.
The effects of that include a serious uptick in debt-t0-capital ratios, especially for airlines and retailers.
What the article does NOT tell us is this: if the leases are converted to debt, will lease-payments be deductible? Typically, only interest paid (on loans) is deductible, not principal. Lease payments, OTOH, are mostly deductible expenses.
HT: ZeroHedge, who opines that GE will be the hardest-hit (really, GECapital.)
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2 comments:
That's gonna hurt.... and not just for Capital. The Industrial divisions sell that way too when customers don't have the full capital to buy it outright.
sigh.
Hmmmmmm.....interesting.
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