| Description |
This thesis examines how U.S. companies responded to a change in lease accounting rules (ASC 842), which requires most leases to be reported in corporate financial statements with the goal of providing transparent disclosure of companies' noncancellable future financial obligations. Prior to ASC 842, companies excluded some leases, referred to as operating leases, from their financial statements. After the adoption of ASC 842, these operating leases are reported as assets (i.e., the right to use the leased asset) and liabilities (i.e., the obligated lease payments) in corporate financial statements. Absent any change in business activities, the adoption of ASC 842 would lead to companies reporting greater amounts of assets and liabilities. This thesis provides a summary of lease accounting, an overview of the accounting change, an analysis of how the adoption affected financial statements and credit ratings of a select group of companies, and an analysis of how these companies responded to ASC 842 in terms of how they acquire assets (i.e., lease vs. buy). |
