Susan Booth, Karl Lott and Douglas Praw are Partners,
Ashley Jason and Paul Park are Associates in Holland &
Knight's
Los Angeles office.
Stacie Goeddel is a Partner in Holland &
Knight's
San Francisco office.
Reporting Leases on the Balance Sheet
The International Accounting Standards Board (IASB) announced on
Jan. 13, 2016, a new ¬– and materially different –
manner of accounting for leases. The new standard, IFRS 16
Leases, effectively eliminates the long-standing
distinction between a lessee's accounting treatment of a
"capital lease" and an "operating lease." A
capital lease is reflected on the lessee's balance sheet and is
economically similar to an asset purchase. An "operating
lease" is not reflected on the lessee's balance sheet but
instead treated, for accounting purposes, in a manner similar to
that of a service contract. There is little change to the
accounting treatment of leases by a lessor.
