The Impact Of New Lease Standards Under Us Gaap And Ifrs On Financial Ratios

Most of the world financial market economies have adopted International Reporting Standards (IFRS) as the necessary framework for financial statements. In the United States, Generally Accepted Accounting Principles (GAAP) is still required, but the adoption of IFRS has the support of many accounting firms and professional organizations and is under consideration by the SEC. The revised lease guidelines under GAAP and IFRS shows a similar effect on the financial ratios and eliminate off-balance sheet financing. This case study illustrates the differences in the treatment of leases and the impact of these differences on financial statements and selected financial ratios after the year 2019. In a given situation, students use GAAP financial statements and prepare an IFRS based balance sheet, cash flow statement, and income statement. It is necessary to understand both the revised GAAP and IFRS rules regarding leases to address our case study. Our case study is designed to be used at undergraduate and graduate levels and courses like Intermediate Accounting, Accounting Theory, Analysis of Financial Statements. The instructor/s can offer our case study as an individual case study or as a group project