How Changes In Accounting Rules Affect Singaporean Investors

New accounting rules now place lease liabilities/assets onto the balance sheet of companies. Rule changes are a net improvement for investors in providing clarity in that it reflects true commitments and liabilities paid by the company, which were not recorded on the balance sheet under prior accounting standards. Caution, there will be a decline in profitability and asset ratios; while the new rules changes benefit transparency of commitments by the company, investors with current holdings in companies which rent/lease real estate, vehicles, machines will be most affected since the commitments are now reflected in liabilities and asset. We will walk you through how this affects the company profitability and return on asset metrics with an example, then take a look at two real-life case studies using Japan Foods and Challenger.

There was a major change in the accounting principles at the start of this year and would affect many companies

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