Woolworths and Wesfarmers’ liabilities will double, and Myer’s liabilities will treble in 2019 – not because of a major acquisition but because of new accounting rules (AASB 16 Leases).    Putting this in very simplistic terms – companies that rent space to sell their goods, record that rental expense in their profit and loss account with other expenses such as wages, electricity etc.    However, they would very likely have entered into a lease agreement for a 5 or 6 or even 10-year lease, and it is this commitment that up to now has not been reflected in the accounts of the operator.    Companies are now being forced to bring operating leases onto their balance sheets for the first time, from January 2019.    Whilst the new accounting standard will improve transparency it will also have a major impact on key financial metrics such as gearing ratios and return on invested capital, as the present value of leases will be represented on the balance sheet as an asset and liability. It becomes a bit more complex as companies have [...]