FASB / IASB New Accounting Rules on Lease Expenses

Randyl Drummer from CoStar News reported that after months of negotiations the Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB) agreed on accounting rules regarding how companies should account for lease expenses on their balance sheets by agreeing on two methods instead of one unified approach.

The two boards have agreed that companies should be required to capitalize leases on their balance sheets as assets and liabilities as the primary part of the revision of lease accounting rules.   However, they have not been able to reach a consensus on the method that the leasee should use to record leases expenses under various types of leases including ground and property leases and equipment leases.

In spite of the apparent compromise detail of the classifications may cause further conflicts between property owners and leasees.  “The positive is that the board understands that there are many types of leases and motivations for leasing, and it’s not just a form of financing,” said Mindy Berman, managing director of capital markets for Jones Lang LaSalle Berman. “That’s the big breakthrough we’ve been working on for more than a year.”

CoStar News – Article – Rule Makers Reach Compromise On Lease Accounting Approach