Tourist Trap: The New Lease Accounting Standard and Debt Covenants.

• In Event: Consequences of Accounting Standards: GAAP vs. IFRS

Abstract

This case focuses on a retail operation that must cope with the ramifications of the new lease standard. Students are required to discern whether the retail operation can remain in compliance with its debt covenants during the transition to the new lease standard and afterwards. Students enhance their understanding of the new lease standard, calculate and interpret financial ratios pertinent to business decisions, think critically regarding effects of divergent accounting treatments on business decisions, and augment student writing and communication skills.

Authors

• Charlene Parnell Spiceland, Simmons College

• J. David Spiceland, University of Memphis

• Phillip Kamau Njoroge, Coastal Carolina University