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An examination of the recently restated financial statements due to inappropriate lease accounting.
- Article from:
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Academy of Accounting and Financial Studies Journal
- Article date:
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September 1, 2007
- Author:
- Hyatt, Troy; Reed, Brad
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ABSTRACT
The purpose of this paper is to describe the history surrounding the recent spike in financial statement restatements related to firms' accounting for leases. The restatements were largely caused by a letter from the SEC emphasizing the rules regarding appropriate accounting for leases. This paper explains why the large number of restatements caused by the SEC letter was such a surprise and discusses the accounting issues raised by the SEC letter. Prior research has found that restatements are more likely in areas where GAAP is contradictory or unclear. GAAP for leases is well established and fairly clear. Also, prior research has found that restatements are more ...