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Sea Change for Lease Accounting

The lease-accounting rule changes proposed this past summer by the International Accounting Standards Board and the US Financial Accounting Standards…

By Paul Bubny - Northeast Region Editor for GlobeSt.com and Real Estate Forum. | Updated on December 09, 2011

The lease-accounting rule changes proposed this past summer by the International Accounting Standards Board and the US Financial Accounting Standards Board have been called “long overdue” as well as “drastic” and a potential “burden.” If and when they take effect in 2012 or later, these rule changes-which cover equipment as well as commercial space-may impact not only corporate balance sheets, but also the ways in which lessees think about leasing. Experts in both accounting and real estate services are advising their clients to be ready when the new FASB/IASB standards become reality.

“Companies that use leasing should start thinking today about how this proposal could affect their financial statements, and should consider the need to make changes to lease structuring, performance metrics, debt covenants and systems,” said Joel Osnoss, global IFRS leader, clients & markets, at Deloitte Touche Tohmatsu Ltd., in a statement. “Education of key stakeholders will also be necessary.”

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