On February 16, 2012, a coalition of several leading commercial real estate organizations, including NAR, released a report that examines the economic impact of the International Accounting Standards Board (IASB) and Financial Accounting Standards Board’s proposed lease accounting standard.
financial accounting standards board
Lease Accounting Proposal Reconsidered Again
On May 19, 2011, the Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB) met to discuss a reworked proposal related to capitalization of leased assets. The organizations ultimately decided to revert back to an August, 2010 version of proposed lease accounting rules that would require businesses to capitalize leased assets, including real estate, onto their balance sheets. This proposal would force businesses of all sizes to claim leased property as a liability, and the resulting increase in liabilities could further stifle financing in an industry that desperately needs liquidity. Increased liabilities for lessees will likely lead to shorter-term and lower-value leases, reducing commercial building owners’ borrowing capacity. NAR will follow the issue as it unfolds, and will continue to work with FASB, IASB, and policymakers to ensure that those deciding on these rules are aware of the potential effects on business credit.
