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New FASB Guidelines and Their Impact on Leasing and Cloud ComputingManaged Services May Provide an Off Balance Sheet Benefit
Thomas [email protected]@wintrust.com
FASB Guidelines
New lease accounting standards will increase on-balance sheet assets and liabilities
Takes effect late 2019
All assets will need to be capitalized
FASB Guidelines
FASB was intended to provide transparency of company financials
New rules/transparency may expose balance sheet costs that were previously ‘hidden’ as operational expense
> Added asset costs and liabilities will be disclosed> No corresponding change in equity> Stock prices could be negatively affected
(Corporations still desire off balance sheet treatment of equipment)
Business Challenges with FASB
Acquire IT assets via Cloud Computing / Managed Service Contracts
How to Satisfy Conflicting Agendas?
Cloud Computing /Managed Services
Examples:
Infrastructure-as-a-Service
Storage-as-a-Service
Desktop-as-a-Service
Audio-Visual-as-a-Service
Disaster-Recovery-as-a-Service
By employing cloud services, companies receive necessary equipment and off balance sheet treatment
Cloud solutions, by nature, are service contracts
Businesses are not required to recognize service contracts as assets and liabilities on their balance sheets and qualify as operational expenses
Corporations accustomed to expense equipment acquisitions on operating leases may now employ cloud solutions to keep assets off balance sheet
Cloud Solutions
Questions?
Thomas D ValloneClient advocate l Relationship builder lBusiness [email protected]@gmail.comwww.linkedin.com/in/thomasdvallonewww.twitter.com/thomasdvallone847-274-8154