Getting To The Bottom Of The Proposed Lease Accounting Rules Changes

Illustration of new lease accounting

As we’ve written about before, recent proposed changes to accounting standards would have enormous impact on commercial real estate leases.  NAR has been on the forefront of calls to ensure proposals do not adversely impact our industry.

What might not be clear is that these changes impact not only commercial real estate, but all commercial leasing in general.  That means that our industry is one of a set of industries that do business using leases and for whom these accounting standards changes would bring major changes to business and markets.

While reading up on the impacts to commercial real estate first and foremost will get you caught up on the impacts to our industry, you don’t need to stop there.  The Federal Accounting Standards Board, FASB,  the body who is undertaking the proposal to make the accounting changes, has made public over 800 comment letters from around the world on the matter of lease accounting standards changes.

The renting of everything from trucks to planes to equipment, the markets for life insurance, the use of service contracts are all potentially touched by these proposed standards changes.  With over 800 letters to choose from, FASB has done us a valuable service in collecting in one spot so many voices from the business communities that depend on leases and their accounting rules. Reading through the comment letters shows in how many ways these accounting rules changes, if adopted, can wreak havoc on a wide set of industries and produce negative consequences far beyond the ills the changes are meant to address.

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