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Proposed changes to lease accounting

Author

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  • Rachel Knubley

Abstract

Purpose - The International Accounting Standards Board (IASB) is proposing a fundamental change to the way lease contracts are accounted for by both lessees and lessors. This article aims to summarise the proposed change. Design/methodology/approach - This article explains why the IASB decided to add a project on lease accounting to its agenda; outlines the proposed approach to lessee accounting; discusses how the proposals will affect lessors of real estate; and describes the next steps in the project. Findings - The proposed changes described in this article will require lessees to recognise assets and liabilities in respect of operating leases on their balance sheet. This will affect lessees of real estate, because many property leases are currently classified as operating leases. The proposed changes will also have a significant effect on any lessor that carries investment property at cost rather than fair value. Originality/value - Interested parties have the opportunity to comment on the proposals summarised in this article when the IASB publishes an exposure draft of the proposed changes in the third quarter of this year.

Suggested Citation

  • Rachel Knubley, 2010. "Proposed changes to lease accounting," Journal of Property Investment & Finance, Emerald Group Publishing Limited, vol. 28(5), pages 322-327, August.
    • Handle: RePEc:eme:jpifpp:v:28:y:2010:i:5:p:322-327
    DOI: 10.1108/14635781011069936
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    Cited by:

    1. Veronica GROSU & Elena HLACIUC, 2018. "IFRS 16 - Challenges and Opportunities in Adopting and Applying the New Standard Regarding Leases," Book chapters-LUMEN Proceedings, in: Carmen NÄ‚STASE (ed.), The 14th Economic International Conference: Strategies and Development Policies of Territories: International, Country, Region, City, Location Challen, edition 1, volume 6, chapter 30, pages 345-354, Editura Lumen.
    2. Barbora Janasová, 2013. "Assessment of the New IASB Lease Accounting Model from Lessees Perspectives [Vyhodnocení přístupu k nové standardizaci leasingu podle IASB]," Český finanční a účetní časopis, Prague University of Economics and Business, vol. 2013(4), pages 110-127.

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