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.
Major challenges of the new lease accounting standards
Sale-Leaseback Accounting
Key Considerations
1. 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.
2. 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?
3. 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
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.
GAAP Dynamics' Perspective
January 2017
In this article, GAAP dynamics covers the changes in sale and leaseback accounting from ASC 840 to ASC 842.
