Lease or Liability?

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The way leases are treated on company balance sheets has not changed for 30 years. But coming changes to lease accounting could have vast implications for lessees and lessors alike.

FASB and its international counterpart are working on a plan that would make accounting reflect an important reality: that a lessee's liability is a financial liability. On paper, at least, there will be little difference between a company leasing and owning property. And since assets cannot exist twice, property companies will start to look like finance firms.

What will it mean for retailers, renters and landlords when operating leases suddenly emerge from the footnotes. Are the economics of leasing a matter of appearance or reality?


FEATURE STORIES
This Land Is Your Land
Changes afoot in lease accounting will have dramatic effects on retail and REIT balance sheets.
New Lease Accounting May Roil Retailers
A new study looks at what would happen to some prominent retailers if accounting rules required the capitalization of operating leases.


MORE RECOMMENDED READING ON LEASE ACCOUNTING
FASB Votes to Revamp Lease Accounting
But new rules won't be ready until 2009.
FASB Issues Lease Accounting Guidance
A new staff position requires companies to account for the "economic reality" of leveraged leases.
Make Room for Lease Accounting Software
Lease managers ''would like to think that Excel will do the job,'' says one executive, but new software is helping companies rid themselves of many cumbersome manual tasks.
FASB, IASB Begin Rethinking Leases
The accounting standard setters take another step toward amending lease accounting, though a new standard remains at least two years away.
FASB, IASB Call for Lease Experts
Help rewrite FAS 13. As a member of the working group, you'll be asked to provide practical advice, not write proposals.
Rethink Off-Balance-Sheet Reporting: SEC
One hundred companies moved nearly $8 billion in assets with outstanding liabilities off their balance sheets, according to the commission's report. By contrast, retained interests actually reported on balance sheets equaled about $1.6 billion.
Virtual Ownership
Synthetic real estate leases may be ready to move from Wall Street to Main.
Lessor Problems
Can large software financings be structured to allow for off-balance-sheet treatment under FAS 13? JP Morgan Chase's Joe Sebik responds.
Hidden in Plain Sight
Leasing may soon have to be justified on economic terms alone.

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