The methods used for lease accounting under current GAAP have received criticism that they are outdated and that too many lease transactions are written to avoid "capitalization". Working with the IASB, the FASB has issued new lease accounting that will be effective in 2019.

Instructions

View the FASB video about the need for a new leasing standard "Why a New Leases Standard?". Also review the FASB Accounting Standards Update 2016-02 Leases (Topic 842) atFASB Standards Updates(scroll down to Update 2016-02) as well as other articles that you locate.

Answer the following questions:

1. How significant do you believe this change is to the lease coverage in our current textbook?
2. Specifically, what do you think will be impacted in U.S. company financial statements as a result of the change?
3. How do you think U.S. business managers might change their leasing operations as a result of this new accounting method?