Stand by for Changes in Lease Accounting

March 10, 2011
Recent decisions by the Financial Accounting Standards Board (FASB) and International Accounting Standards Board, although couched in tentative terms, indicate a more practical approach to lease accounting than originally set forth in an Exposure Draft circulated for comment by the FASB last year. While the Exposure Draft presaged a major overhaul in accounting for leases by both lessors and lessees, on three important issues—balance sheet recognition of leases, lease terms and contingent rentals—the boards appear to have listened to a number of the concerns raised in the comment letters. This update examines these developments from the perspective of the lessee.