In this updated Shipping Insights Briefing, 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.
- 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.