The Financial Accounting Standards Board is considering significant changes to ASC 840 (formerly known as FAS 13). These changes would affect the way commercial real estate leases are treated for accounting purposes by both lessors and lessees.
The International Accounting Standards Board has undertaken a joint project with the FASB as part of their Memorandum of Understanding (See note below) for convergence projects. This joint project is intended to address criticism of accounting for operating leases.
Standards currently require off-balance sheet accounting and provide users of the financial statements with inadequate information regarding the obligation of lessees. The two boards’ project to revise applicable standards may lead to a complete overhaul of lease accounting, eliminating the need to distinguish between operating and finance leases and resulting in all leases being reflected on the balance sheets of both lessors and lessees. The exposure draft of the new standard is expected later this summer, and FASB and IASB will seek comments from constituents.
Continue Reading for Free
Register and gain access to:
- Breaking commercial real estate news and analysis, on-site and via our newsletters and custom alerts
- Educational webcasts, white papers, and ebooks from industry thought leaders
- Critical coverage of the property casualty insurance and financial advisory markets on our other ALM sites, PropertyCasualty360 and ThinkAdvisor
Already have an account? Sign In Now
© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
Howard Roth
As the Global Real Estate Leader, Howard coordinates the firm's activities across a broad array of related services around the world. EY has the largest integrated real estate practice of any Big Four firm, with more than 7,500 professionals around the world providing audit, tax, transaction and advisory services to owners, builders, lenders and users of real estate. EY serves more than 4,000 real estate clients throughout the world. Howard brings more than three decades of experience in the real estate industry. He has worked extensively with major real estate private equity funds, domestic and offshore real estate investment trusts and large public homebuilders, as well as numerous construction and hospitality companies. His credentials include a BA in Accounting from Hofstra University. He is a member of the American Institute of Certified Public Accountants and New York, New Jersey and Connecticut Society of CPAs, has been a columnist for several major industry publications and is frequently a speaker at key real estate industry events.
