Banking & Surety Considerations – Construction Lease Accounting
ASC 842’s changes affect all financial statements, but the balance sheet is the most affected. For instance, construction companies may find their debt to equity ratio has increased or there has been a decrease in the return on assets.
The relevant issues, which center on how short- and long-term financing is reported on contractors’ financial statements, affect how banks and sureties evaluate contractors’ financials as they determine issues such as loan amounts.
The changes to operating leases, which often were reported in financial statement footnotes, now must be reported on the balance sheet.
This guide offers insights to banking and surety considerations. To learn more, download this Construction Issue Sheet.