The Financial Accounting Standards Board (FASB) today issued an Accounting Standards Update (ASU) intended to improve financial reporting about leasing transactions. The ASU affects all companies and other organizations that lease assets such as real estate, airplanes, and manufacturing equipment. The changes are significant and follow on the heels of similar international guidelines recently announced by IASB, the International Accounting Standards Board. The definition of what constitutes a “lease” vs a “service agreement” has been modified, and virtually all leases must now be reported on the balance sheet, not an income statement. This may have huge implications for many companies as these changes are communicated, understood, and implemented. Read more.
