a. Why could the new accounting standard trigger debt covenants (technical default)?

b. Do you think the likelihood that this new accounting standard will be released would already be influencing the leases that companies would be entering?

c. Do you think that debtholders would prefer that more leases be recognised and disclosed on the balance sheet, or be kept off balance sheet?

d. Explain from a contracting perspective why an organisation might want to overstate its assets and understate its liabilities.