Tag Archives: GAAP

Variable Leases under ASC 842: First Evidence on Properties and Consequences 

By | December 13, 2022
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The new lease accounting standard ASU 2016-02, Lease (Topic 842), codified as ASC 842, requires firms to recognize both finance and operating leases on their balance sheets. However, the Financial Accounting Standards Board (FASB) made an exception for leases with variable payments, which can still be kept off-balance-sheet, affecting a sizable portion of total lease… Read More »

Why Do Lenders Include Cost Savings and Synergy Add-backs in Loan Agreements?

By | June 9, 2021
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Accounting is conservative. Under Generally Accepted Accounting Principles (GAAP), a firm should recognize losses before the losses are realized but postpone the recognition of gains until the gains are realized. In other words, the conservative accounting principle promotes timely loss recognition at the expense of timely gain recognition. However, in debt contracting, where lenders and… Read More »