FASB Lease Accounting

In February 2016, Financial Accounting Standards Board (FASB) finally issued an amendment to Accounting Standards Codification (ASC) by creating Topic 842 - Lease update. Similarly, the International Accounting Standards Board (IASB) issued their version of the update called IFRS 16.

These updates were the result of a joint initiative by both boards to increase transparency and comparability among organizations.

• Most leases are now recorded on a company’s balance sheet as both an asset and as a liability
• The finance lease and operating lease classifications have been retained
• Measurement of balance sheet recognition is based on the present value of lease payments

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