Monday, October 31, 2016

Be Afraid of New FASB Accounting Standards, Be Very Afraid

Over the last 14 years, American Tower as a leasor of wireless infrastructure has seen annual total returns of 16.3 percent while the S&P 500 averages a 6.8 percent return, said  So what’s scary about that?

A proposed rule change from the Financial Accounting Standards Board (FASB) has a chance of impacting balance sheets across the board in the tower industry as it stipulates “a lessee will be required to recognize assets and liabilities for leases with lease terms of more than 12 months.”  The ruling fundamentally negates off-balance sheet financing…. a big reason investors choose companies with operating leases, said.  
American Tower’s latest quarterly report recognized pending changes:  

 “In February 2016, the FASB issued new guidance on the accounting for leases. The guidance amends the existing accounting standards for lease accounting, including the requirement that lessees recognize assets and liabilities for leases with terms greater than twelve months in the statement of financial position. Under the new guidance, lessor accounting is largely unchanged.This guidance is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2018. The standard is required to be applied using a modified retrospective approach for all leases existing at, or entered into after, the beginning of the earliest comparative period presented. The Company is evaluating the impact this standard will have on its financial statements,” the ATC report said. Continue Reading

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