The Lease Accounting Standards

The Financial Accounting Standards Board (FASB) and International Accounting Standards Board (IASB) released new lease accounting standards for the first time in almost 40 years. ASC 842 replaces ASC 840 and IFRS 16 replaces IAS 17. The biggest change from both standards is that now all operating leases will come onto the balance sheet. For more information regarding the new accounting standards, and how they will impact your company’s balance sheet, please read below.

ASC 842

ASC 842 replaces ASC 840. Under ASC 842, leases will be classified as either operating or finance leases under a dual classification model, but operating leases will now be reported on-balance sheet.


IFRS 16 replaces IAS 17. Under IAS 17, leases are not classified as operating or finance leases. Instead, almost all leases are treated as finance leases and reported on the balance sheet.

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