Document Type
Peer-Reviewed Article
Publication Date
2022
Abstract
Accounting Standards Codification (ASC) Topic 842, the new accounting standard on leasing, aims to improve transparency related to leasing and to enable users of financial statements to more readily compare firms that lease with firms that borrow to buy assets. The standard is effective for 2020 and has had a significant impact on the balance sheets of many firms. This note provides an overview of the accounting changes and highlights key issues related to financial analysis and valuation with guidance on how to avoid common errors and accurately calculate and compare enterprise value, EBIT, EBITDA, valuation multiples and key valuation ratios. We also explain how financial data providers, Bloomberg, Capital IQ and FactSet, have adapted the information provided on these metrics.
DOI
10.33423/jaf.v22i1.4988
Recommended Citation
Lyons, B. (2022). Valuation challenges arising from the new leasing standard ASC 842: A teaching note. Journal of Accounting and Finance, 22(1). Doi: 10.33423/jaf.v22i1.4988
Creative Commons License
This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License
Comments
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