Accounting for Leases at American Airlines (A)
Synopsis
In March 2020, as coronavirus reduced demand for air travel, an analyst was forecasting American Airlines' (American's) first quarter financial results. To develop a forecast, she needed to familiarize herself with Accounting Standards Update (ASU) 2016-02, "Leases (Topic 842)," passed four years earlier by the Financial Accounting Standards Board. ASU 2016-02 required companies to disclose all leases on their balance sheets, but it made an exception for leases with variable payments, allowing companies to leave such leases off-balance sheet. The Wall Street Journal estimated that more than 50% of American's leases remained off-balance sheet due to the exclusion of variable leases. Should American and other companies be allowed to leave variable lease payments off-balance sheet? How did the decision to leave these payments off-balance sheet affect companies' risk profiles and valuations?
- कॉपीराईट:
- 2020 HBS
Book Details
- Book Quality:
- ISBN-13:
- Publisher:
- Harvard Business Publishing
- Date of Addition:
- 2021-02-27T20:17:42Z
- भाषा:
- English
- श्रेणी:
- Usage Restrictions:
- This is a copyrighted book.