Date of Submission
Campus Only Senior Thesis
Bachelor of Arts
2018 Isabella K Lewis
After many years of deliberations, the Financial Accounting Standards Board (FASB) has issued its new standard on Leases. This thesis will examine how the new lease standard can affect a company’s debt agreements with lenders, more specifically debt covenants. It will discuss how the revised lease accounting can alter common debt covenant ratios, and the implications of classifying the lease as operating vs. finance from the perspective of the lessee. A detailed case study incorporating the new accounting changes will illustrate the impact of the new standard on a set of common solvency and liquidity measures. This thesis will then discuss how lenders incorporate leases when structuring debt agreements. It will conclude with a discussion on whether concerns over the new standard are warranted, given that the obligations of the borrower remains fundamentally the same.
Lewis, Isabella, "How Will the New Leasing Standard Impact Loan Covenants, and are These Concerns Warranted?" (2018). CMC Senior Theses. 1850.
This thesis is restricted to the Claremont Colleges current faculty, students, and staff.