Deliberations on Lease Accounting


By Donald Applegarth

The FASB and IASB have decided that there may be a reason to create two categories of leases. The boards are now considering a structure where "finance leases" would be treated like an installment purchase, putting an asset on the balance sheet as well as a liability to be paid over time. "Other-than-finance" leases would also appear on the balance sheet, but would flow through the income statement like today's operating leases because the financing element would not be considered significant.

Additionally, multiple comments on the Lease Exposure Draft have caused the joint boards to take pause and revisit how companies should account for renewal options and other factors. Specifically, the Boards have:

  • Decided to raise the threshhold for deciding when lease renewal options should be included in the liability
  • Tentatively concluded that lessees and lessors should follow the same basic guidelines for deciding if an obligation tied to some kind of variability would be included in the liability or the receivable

More details on this discussion may be found in the February 16, 2011 Summary of Board Decisions on the FASB website.

Schneider Downs provides accounting tax, wealth management, technology  and business advisory services through innovative thought leaders who deliver the expertise to meet the individual needs of each client. Our offices are located in Pittsburgh, PA and Columbus, OH.

This advice is not intended or written to be used for, and it cannot be used for, the purpose of avoiding any federal tax penalties that may be imposed, or for promoting, marketing or recommending to another person, any tax-related matter.


You’ve heard our thoughts… We’d like to hear yours

The Schneider Downs Our Thoughts On blog exists to create a dialogue on issues that are important to organizations and individuals. While we enjoy sharing our ideas and insights, we’re especially interested in what you may have to say. If you have a question or a comment about this article – or any article from the Our Thoughts On blog – we hope you’ll share it with us. After all, a dialogue is an exchange of ideas, and we’d like to hear from you. Email us at contactSD@schneiderdowns.com.

Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax, or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice.

© 2019 Schneider Downs. All rights-reserved. All content on this site is property of Schneider Downs unless otherwise noted and should not be used without written permission.