Ralph Petta, president and chief executive officer of the Equipment Leasing and Finance Association (ELFA) said that despite changes brought about by the new leasing standard in the US, businesses will continue to "enjoy the benefits" of engaging in equipment finance.
"Although the new standard will change how leases are accounted for on corporate balance sheets, it will not impact the ability of companies to acquire productive equipment to grow their businesses. There are many reasons to lease equipment, and the primary reasons will remain intact under the new rules, from maintaining cash flow, to preserving capital, to obtaining flexible financial solutions, to avoiding obsolescence," said Petta.
Petta also said the association appreciated that the Financial Accounting Standards Board (FASB) had been receptive to input from ELFA members in developing the new standard, and added: "The final rules improved significantly from where they began through the release of two Exposure Drafts — in 2010 and in 2013 — that generated hundreds of comment letters and other feedback from stakeholders. The resulting two-lease model for lessee accounting is similar to U.S. GAAP today, as are the new rules, in general, for lessor accounting."
Petta highlighted that it is now time for companies to prepare. ELFA is organising a number of activities in order to help companies with the implementation of the new standards.
"With the new standard scheduled to take effect in 2019 for public companies and a year later for private firms, now is the time to prepare. ELFA is organizing a number of activities, including a one-day workshop on March 2, and creating a number of new resources, including FAQs and tip sheets, to help lessees and lessors meet the challenges of transitioning to the new rules. We are also developing a work group of experts to be a sounding board on implementation issues that may arise, so we can continue to be a resource to the FASB on the lease accounting rules going forward," he said.