The Lease Accounting Standards

ASC 842, IFRS 16, GASB 87, & AASB 16

The Financial Accounting Standards Board (FASB) and International Accounting Standards Board (IASB) have released new lease accounting standards for the first time in almost 40 years. ASC 842 replaced ASC 840 and IFRS 16 replaced IAS 17. The biggest change from both standards is that all operating leases are now on the balance sheet. For more information regarding the latest accounting standards, and how they 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.


GASB 87 governs how government entities will report their leases under the US GAAP standard. It differs significantly from FASB's ASC 842 - the other US GAAP standard for private entities.


AASB 16 replaces AASB 117 in Australia. AASB 16 closely follows the requirements set out by the International Accounting Standards Board in IFRS 16.