Retail Food Group shares suffered their biggest fall in nine years yesterday after UBS said changes to international accounting standards could cause a "material" impact on the company's debt profile.

The listed company behind brands including Donut King, Gloria Jean's, Brumby's, Crust Pizza and Michel's Patisserie watched its shares tumble 11.3 per cent to a 15-month low of $4.63 following the analyst call. It was the second-largest drop on record for the company. Trading volume was over eight times higher than the 20-day average.

Retail Food Group was singled out and saw its sell rating maintained by UBS analysts led by Jordan Rogers, but Ardent Leisure, Adairs, Greencross and Reject Shop are also expected to be affected by the changes to accounting standards.

Set to come into effect on July 1, 2019, the International Accounting Standards Board's latest changes will see about $US2.8 trillion ($3.75 trillion) in leases find their way on to balance sheets around the world, according to UBS.

"Balance sheets will grow, gearing ratios will increase and return on capital employed (ROCE) will generally fall," Mr Rogers said in a note to clients. "While Retail Food Group has limited lease debt based on current disclosures, our interpretation based on financial disclosures is that this figure is net of sub-leases to franchisees."

"When reviewing against the accounting standards, we believe that it is likely that the full lease obligation including where Retail Food Group has the head lease agreement for an outlet with a shopping centre and has sub-let to a franchisee will be consolidated on to the balance sheet." Shares in The Reject Shop were also hit hard yesterday, down 5.1 per cent to $3.70.

However, the other three names highlighted by UBS outperformed a negative market, with Ardent Leisure rising 2.9 per cent, Adairs adding 1.5 per cent and Greencross lifting 1.1 per cent.

Kohler, C. Retail Food shares toasted. The Australian. 6 June 2017. p. 27.

Required:

a) Using content and theories covered in ACC30008, the events reported above, and your

personal opinion, explain and discuss the accounting standard setting considerations in terms of the withdrawn exposure draft on this issue and delay in issuing the final lease standard, and the implications arising from the standard discussed in the above article.

b) What might explain the share price increases for the other named companies?