NAR Signs Onto Lease Coalition Letter
May 7, 2012
On Thursday, April 26, 2012, a coalition of real estate and other business organizations (including NAR) wrote to the Financial Accounting Standards Board (FASB) and International Accounting Standards Board (IASB) reaffirming their calls for an economic impact study, extensive field testing, and full re-exposure of the entire lease accounting proposal — with the goal of creating a standard that will meet the tests of the marketplace and fulfill the needs of all stakeholders.
Under the boards’ proposal, U.S. companies that lease commercial space would be required to capitalize the costs of that lease — similar to as if they purchased the property — instead of recognizing the true costs of the lease transaction. It is estimated that under current terms, businesses would be required to capitalize over $1.1 trillion in leased real estate assets onto their balance sheets. For businesses leasing space, especially small businesses, this will change these leases into a major liability.
FASB and IASB plan to re-expose their controversial lease accounting reform proposal for public comment during the second half of this year, along with expectations of finalizing their lease accounting overhaul by mid-2013.