Bermuda

Details

  • Service: Advisory
  • Industry: Financial Services
  • Type: Publication series
  • Date: 6/28/2013

Shipping Insights Briefing 

Nearly two and a half years ago we issued a Shipping Insights Briefing, highlighting proposed changes to accounting for leases. Those controversial proposals suggested in the future many more charter arrangements would come “on balance sheet”. Hit by a wave of adverse comments, the accounting standard setters have spent the intervening period reconsidering their position.
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In this updated Shipping Insights Briefing (PDF 1.3MB), KPMG’s Global Shipping Practice reflects on what these proposals will mean for the shipping sector – a sector currently struggling to attract sufficient sources of finance, and one where balance sheet stresses have meant the recent failure of several significant shipping owners and operators.

 

Proposal headlines

 

  • A new dual model for lease accounting along with different classification tests for property and non-property leases.
  • A front loaded profile of total lease expense on most non-property leases.
  • Lease definition based on the use of an identified asset when the contract conveys a right to control the use of the asset.
  • A new requirement to monitor leases throughout the lease term and re measure assets and liabilities even if there is no change to the agreement.
  • Transition will require all existing and potential lease contracts to be reanalysed.

 

 

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