Lease Accounting Reform and Economic Consequences: The Views of Preparers and Users

Department of Accounting, Finance & Law Working Paper No. DP 01/08

41 Pages Posted: 26 Dec 2001

See all articles by Alan Goodacre

Alan Goodacre

University of Stirling - Department of Accounting and Finance

Vivien A. Beattie

Lancaster University - Management School

Sarah Jane Thomson

Heriot-Watt University - School of Management and Languages

Date Written: December 2001

Abstract

In response to perceived difficulties with extant lease accounting standards in operation worldwide, the G4+1 issued a discussion paper which adopts a 'property rights' perspective and proposes that all leases should be recognised on the balance sheet (ASB, 1999). This paper contributes to the ongoing debate by conducting a questionnaire survey of UK users and preparers to assess their views on the G4+1 proposals and on the potential economic consequences of their adoption. The results, based on 132 responses, indicate that both groups accept that there are deficiencies in the current rules, but they do not agree on the way forward. The preparers do not support the G4+1 proposals; they are lukewarm to the general principles and, in the main, object to the detailed suggestions. By contrast, the users are strongly supportive of the general principles of the proposals and neutral to the details. Both groups believe that the proposals would lead to significant economic consequences for company lessees, lessors and for users. The impact on respondents' views of familiarity with the proposals, level of lease usage, and company size, is also examined.

Keywords: Lease accounting; Off-balance sheet finance; Survey; Economic consequences

JEL Classification: M41, M44, G32

Suggested Citation

Goodacre, Alan and Beattie, Vivien and Thomson, Sarah Jane, Lease Accounting Reform and Economic Consequences: The Views of Preparers and Users (December 2001). Department of Accounting, Finance & Law Working Paper No. DP 01/08, Available at SSRN: https://ssrn.com/abstract=294624 or http://dx.doi.org/10.2139/ssrn.294624

Alan Goodacre (Contact Author)

University of Stirling - Department of Accounting and Finance ( email )

Stirling, FK9 4LA
United Kingdom
+44 1786 467291 (Phone)
+44 1786 467308 (Fax)

Vivien Beattie

Lancaster University - Management School ( email )

Bailrigg
Lancaster, LA1 4YX
United Kingdom

Sarah Jane Thomson

Heriot-Watt University - School of Management and Languages ( email )

Division of Accountancy & Finance
Edinburgh EH14 4AS, Scotland
United Kingdom

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