search query: @author Beattie, V. / total: 11
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| Author: | Beattie, V. Edwards, K. Goodacre, A. |
| Title: | The impact of constructive operating lease capitalisation on key accounting ratios. |
| Journal: | Accounting and Business Research
1998 : AUT, VOL. 28:4, p. 233-254 |
| Index terms: | Marketing models Accounting research Asset valuation Cash management |
| Language: | eng |
| Abstract: | The authors note that current UK lease accounting regulation does not require operating leases to be capitalised in the accounts of lessees, although this is likely to change with the publication of FRS5. This study conducts a prospective analysis of the effects of such a change. The potential magnitude of the impact of lease capitalisation upon individual users' decisions, market valuations, company cash flows, and managers' behaviour can be indicated by the effect of key accounting ratios, which are employed in decision-making and in financial contracts. The capitalised value of operating leases is estimated using a method similar to that suggested by Imhoff, Lipe and Wright (Accounting Horizons 5(1991)51-63), adapted for 1994 for a random sample of 300 listed UK companies show that the unrecorded long-term liability represented 39% of reported long-term debt, while the unrecorded asset represented 6% of total assets. The Spearman rank correlation between each ratio before and after capitalisation revealed that the ranking of companies changed markedly for gearing measures in particular. |
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