Article Abstract:
Changes to UK accounting regulations regarding commercial leases will result in occupiers demanding shorter leases although the new rules will not be enforced to at least 2002. The new regulations will make longer leases a larger liability for firms, as they will be shown on their balance sheets as both an asset and a liability. Landlords prefer to negotiate longer leases. The type of property and the level of demand for the property will also reflect on the length of a lease. Some observers predict there will be a number of mergers in the retail sector due to the new accounting rules.
User Contributions:
Comment about this article or add new information about this topic:
Article Abstract:
A ruling on joint-venture companies by the UK Financial Reporting Review Panel could have implications for the property sector, which frequently uses the joint-venture arrangement. The Panel, which is the enforcement body of the Accounting Standards Board, successfully challenged Associated Nursing Services PLC (ANS) over two joint-venture companies it had set up. The Panel ruled that, even though ANS's investment was not greater than 50%, it had more than 50% control over the joint ventures, so ANS should have included all assets and liabilities of the joint-venture operations on its balance sheet.
User Contributions:
Comment about this article or add new information about this topic:
Article Abstract:
Before the introduction of the FRS 12 companies were able to hide property leases of vacant buildings as they did not have to appear on their balance sheets. The FRS 12 calls on firms to record the cost of vacant properties or sublet properties, where the rents are less than the liability. There are a number of ways firms can lessen the liability by taking expert advice. Many firms are left with vacant or sublet buildings when they merge with other firms or because of rapid expansion of their businesses. They are left with unsuitable buildings which still form a liability.
User Contributions:
Comment about this article or add new information about this topic: