In anticipation of a potential transaction that would list the company on the Canadian stock exchange, the Accounting & Reporting Advisory (“ARA”) team performed a parallel evaluation under both US GAAP (ASC 842) and international reporting standards (IFRS 16). As it remained uncertain which framework the adoption would be under, it was important to identify and catalogue where the standards diverged, specifically in the context of this company’s lease portfolio. Stout provided guidance to management on how to navigate these differences in effective date and various policy elections.

Based on the company’s substandard credit profile, the Complex Securities and Financial Instruments (“CSFI”) team was pulled in to support the incremental borrowing rate analysis. Through the performance of a synthetic credit rating, review of existing debt arrangements, and other quantitative and qualitative evaluations, the CSFI team developed a modeled borrowing rate. Based on the respective terms of the leases within the portfolio, the ARA team applied the appropriate discount rate in determining the balance sheet impact.