A major change in lease accounting reporting for public companies is coming up in 2019 (for fiscal years starting after December 15, 2018, to be precise). In essence, leases will be recorded on the balance sheet, resulting in an increase in both assets and liabilities. The change enhances the comparability of balance sheets between companies in the same industries that choose to lease vs. own. For the accounting enthusiasts, we recommend PwC’s 316-page pdf Guide to Lease Accounting and EY’s 397-page guide.
What can analysts using Sentieo do to be better prepared for 2019? We recommend the following DocSearch query for an efficient update on company estimates of the impact within your coverage universe: ASU 2016-02 BEFORE250 (million OR billion)
This query will search for the new standard mentions before a numerical disclosure (up to 250 words). Below, we’ve highlighted a few of the results from our own searches.
Walmart Stores (WMT) “estimates total assets and liabilities will increase approximately $14.5 billion to $16.5 billion upon adoption, before considering deferred taxes.”
Ross Stores (ROSS) is indicating around $4 billion.
Dollar Tree (DLTR) is looking at a range of $5.5-$6.5 billion.
Besides retail, we are seeing more substantive changes coming in transportation.
Union Pacific (UNP) is looking at around $2 billion impact.
Hawaiian Airlines (HA) will be adding around $500 million from its aircraft and engine leases.
XPO Logistics (XPO) has around $2 billion in operating leases.
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