Financial Statement Lease Disclosure
SUBJECT: Disclosure of Lease in Wheeling Ironworks? Financial Statements
As a shareholder of Wheeling Ironworks I am concerned about the disclosure of the non-cancelable warehouse lease that was signed at the end of 2001 to provide storage for excess inventory. In order for the financial statements to fulfill their purpose as the principal means of communicating accounting information they must disclose information such as this lease. The signing of such a lease is important in determining the approximate the value of the company because of the future expenses that will be incurred as a result of the lease and because the reason the lease was signed gives valuable information about the amount of inventory the company holds. The non-cancelable ten year lease is a material change and it is important that the shareholders are aware of it.
In order to appropriately disclose this information the lease should be disclosed in a footnote to the 2001 financial statements detailing both the term and cost of the lease. In 2002 and the following years the rent expense should be recorded as usual and a similar footnote should be included.
The lease will not be reflected on the December 31,
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