Lease Capitalization—How It Affects Borrowers and Lenders
July 23 2020 16:00 - 17:00 UTC
Why You Should Attend This Webinar
Generally accepted accounting principles (GAAP) does not change often, but when they do, bankers and other lenders need to understand how the change in GAAP effects their borrowers ability to repay. GAAP is going to require that companies capitalize their leases, and that will worsen their leverage, reduce their liquidity, and lower their profitability.
Lease capitalization is one of three significant GAAP changes occurring very close together—revenue recognition, current expected credit loss, and lease capitalization. Lease cap will affect both for-profit companies and not-for-profit organizations, so bankers need to identify and evaluate how this new liability and right-of-use asset will affect its borrowers.
This webinar will explain why and when lease capitalization will be implemented and show how capitalizing both operating leases and financing leases will impact the financial condition and performance of borrowers.
Course Description and Content
Key learning obectives include:
- Learn the key elements of the lease capitalization GAAP
- Explain how lease capitalization will put both the lease liability and the right-of-use asset on the borrower’s balance sheet
- Offer guidance on what items of financial condition and performance will be most impacted and tips on how to underwrite borrowers under the new GAAP
Specific topics covered in the webinar include:
- Lease capitalization
- Implementation date
- Elements of capitalization—capitalization rate, amortization, right-of-use asset, lease liability
- Operating leases and financing leases
- Analysis and underwriting
- Ratio covenants most sensitive—leverage ratio, current ratio
- Lease cap’s impact on liquidity, leverage, solvency, and profitability
- Portfolio management
- Identification of industries and borrowers most sensitive to lease cap
- Review and restructuring as needed of loans with financial covenants affected by lease cap
• Prerequisites: N/A • Advanced Preparations: N/A
• Course Level: Basic • Group Internet Based Training
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Lease Capitalization How it Affects Borrowers Lenders 07232020.pdfAttendees Only
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