Leases: Financial Accounting Measuring and Recording Challenges Continue

Abstract

This article discusses how five financial accounting standards setting organizations (FASB, IASB, GASB, FASAB, PCC) have been and are addressing the ongoing challenges of measuring and reporting lease transactions and events. Prior to 2016, contracts for assets leased for more than one year did not appear as liabilities on the balance sheet. It was called off-balance-sheet financing. With the FASB ASU2016-02, contracts to lease assets for more than one year were to be measured and reported in the financial statements. The research reported in this article indicates that there are efforts by those who lease assets to return to off-balance sheet financing at least in part when some of lease amount varies due to the measurement method used.