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New Accounting Standard Sheds Light On WeWork’s Balance Sheet

In WeWork’s IPO prospectus, it was revealed that the coworking firm had $47 billion in lease liabilities, making it one of the world’s largest lessees. Click To Tweet

This probably comes as a shock to most, as the firm is known for bleeding through cash and its lack of profitability. 

In the past, operating leases did not have to be included on corporate balance sheets. Now, these commitments are required to appear on balance sheets for good reason — the world’s publicly traded companies have nearly $3 trillion in lease obligations combined.

One stipulation is that permit leases shorter than one year should remain off the balance sheet, a huge convenience for companies like WeWork and IWG.

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In fact, IWG’s annual report found that the accounting standard is “already driving significant increases in demand for our services from enterprises.”

This loophole will likely lead auditors to scrutinize short-term leases, especially as WeWork continues to target large corporate clients.

Going forward, anyone thinking about buying shares in WeWork’s IPO should remember that the company is expected to find $47 billion from somewhere, including $10 billion of that in the next five years.

ABOUT Aayat Ali
Aayat Ali

Aayat is an editor for the Daily Digest based out of Kentucky. She has worked with local coworking spaces since August of 2017 and enjoys taking her firsthand knowledge to write about the fascinating, constantly evolving world of flexible workspaces. Feel free to reach out to her at [email protected] View all posts by Aayat Ali

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