New Lease Accounting Standards

Sale-Leaseback and Build-to-Suit

Both sale-leaseback and build-to-suit transactions are treated differently under the new standards. These new requirements may impact how the lessor and lessee account for the underlying asset on the balance sheet.

Key considerations for sale-leaseback and build-to-suit agreements include:

  • How does accounting of sale-leaseback transactions change under the new standards? Consider when gains and losses are recognized, as well as if the lease is classified as a finance lease.
  • How has the change from a risk-oriented test to a control-oriented test shifted the definition of asset owner for build-to-suit agreements? How is control over the asset determined?
  • Is there an option on the asset? What events are capable of triggering the option? What is the exercise price on the option?

What the Experts Think

Links to Additional Resources

Sale-Leaseback and Build-to-Suit

An Analysis of the New Sale and Leaseback Guidance

September 2018

This article explains how the sale and leaseback guidance changes under the new lease accounting standard for lessors and lessees.

KPMG's Perspective

June 2016

In this webcast, KPMG covers the effects of the new leasing standards on sale leaseback transactions and build-to-suit leases.

GAAP Dynamics' Perspective

January 2017

In this article, GAAP dynamics covers the changes in sale and leaseback accounting from ASC 840 to ASC 842.

Subscribe Today

The Lease Accounting Newsletter

Get Best Practices for Lease Accounting

Delivered to Your Inbox!