Lease Accounting Challenges

How to Succeed with Adoption of the New Standards

Companies are facing a variety of challenges as they implement the new lease accounting standards, including ASC 842 and IFRS 16. Learn more about each of these technical accounting challenges and best practices for handling them.

Debt Covenants

The new lease accounting standards may impact debt and loan covenants, as well as future creditor relationships.

Incremental Borrowing Rate

The incremental borrowing rate, or IBR, will be used to calculate lease liabilities under the new standards.

Lease and Non-Lease Components

Separating lease and non-lease components requires knowing how to define the components and how to calculate standalone observable prices.

Lease Definition

Learn how to determine whether a contract contains a lease or not using the new lease definition established by the new standards.

Lease versus Buy Strategy

Many companies wonder whether the new lease accounting standards should change their lease versus buy strategy and how to analyze this process.

Lessor Accounting

While most lease accounting changes affect lessees, there are still some impacts lessors need to be aware of as they adopt the new standards.

Sale Leaseback and Build-to-Suit

There are new requirements for sale leaseback and build-to-suit accounting under the new lease accounting and revenue recognition standards.

Tax Impact

Tax accounting for leases may also be impacted by ASC 842 and IFRS 16. The impacts may include changes to deferred, federal, and state taxes.


The available transition options and practical expedients have changed since the initial publication of the lease accounting standards in order to make adoption easier.