The Financial Accounting Standards Board (FASB) is drafting changes to the rules on lease accounting which will have a major impact on how tenants and landlords account for leases on their balance sheets. The changes could be published during the second quarter of 2011 and the standard could go into effect as early as 2013.
There are two changes with which to be concerned. 1. Lease obligations will be capitalized as a form of debt financing. 2. The occupancy expense will increase, but companies will no longer be able to recognize rent expense. Instead, it will henceforth be an amortization of an asset.
One thing for sure, if you are a tenant or a landlord or a broker, this is a game changer.
