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?


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