Lease accounting compliance for the

Retail & Consumer Products Industries

Lease accounting for the retail and consumer products industries changes under the new standards. Retail and consumer products companies lease a diverse range of assets from buildings to manufacturing equipment. Sometimes, retailers also act as lessors.

The new leasing standards require retail and consumer products companies to update their accounting policies based on the new principles. In some cases, extensive analysis may be required to arrive at judgments on how to apply the standards to certain lease types.

retail lease accounting

Key Considerations

1. Which types of leases are in and out of scope under the new standards? Consider not only traditional property, plant, and equipment, but also intangible assets.

2. How should supply contracts with manufacturers be evaluated? Consider manufacturers of consumer products and whether the manufacturing asset meets right of use requirements.

3. How are subleases accounted for under the new standards? Consider situations where retailers act as both lessor and lessee of a certain space.

What the Experts Think

Accounting for leases is changing: What's the impact on consumer market and retail companies?

KPMG's publication covers some of the major potential impacts of IFRS 16 on the retail sector, including end-of-term options, variable payments, service charges, and AROs.

How the FASB’s new leases standard will affect retail and consumer products entities

retail and consumer products FASB lease accounting

In their "Technical Line" series, EY provides information on the changes consumer and retail industries should prepare for due to the lease accounting standards.