In August 2010, the Financial Accounting Standards Board (FASB) released its Proposed Accounting Standards Update on Leases which, if enacted, would have essentially eliminated the concept of an operating lease and required recognition of all leases on the balance sheet. For many of our clients, this change would have impacted balance sheets, debt covenants and future real estate transactions. FASB and IASB, after further deliberation and discussion, intend to issue a final standard for leases later in 2011. Health care providers should consult with their legal advisors and their accountants before the effective date of the final rules in order to understand the consequences of such changes.
