New Accounting Standards Unlikely To Affect Car Leasing Industry

Friday, 10. September 2010

Hi, Graham Hill here, thank you so much for visiting my blog, I hope you learn a lot and as a result end up driving a great car. In order to do so you can get all the information you need by buying my book, An Insider Guide To Car Finance or use me to finance your next car. Happy driving.

There are new accounting rules being worked on by the International Accountancy Standards Board in order to standardise the way that leases are accounted for. Years ago we made a big issue about the fact that contract hire type leases were ‘off balance sheet’ and simply recorded as a revenue expense. This was quite important for large corporates but for smaller companies it didn’t actually carry a lot of weight and I can’t remember any client that said he wanted to go the contract hire route because it would take the accounting for his car off the balance sheet. So whilst within the industry there have been many rows and disagreements over accounting policy and presentation it should all result in virtually no difference. We haven’t seen the final directive so we aren’t sure whether there will be any impact at all on the rates charged by the contract hire companies to their customers resulting from the changes but like the BVRLA I see very little change to the way that companies fund their cars. By Graham Hill

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