Accounting Foundations: Leases

Explore how accountants handle leases and the corresponding assets and liabilities, and learn about the impact of the 2019 Financial Accounting Standards Board (FASB) lease rules. Instructors Jim and Earl Kay Stice give an overview of leasing versus buying, and discuss different ways to finance assets before giving a quick history of lease accounting and the FASB financial standards. They then cover how the 2019 FASB rules affect the way organizations account for leases, and address transition difficulties.

Learning objectives
Calculate the least expensive financing method in a given situation.
Explain how leasing options improve relationships between a business and customer.
Recognize an example of substance over form that would require the lease to be shown as a sale on a balance sheet.
Summarize the importance of keeping lease payments below the FASB value of payments threshold.
Determine the effect of an adjusted asset turnover ratio on a company’s efficiency.
Identify Sir David Tweedie’s view on operating leases.
Recall the major accounting rule change adopted by the FASB and the IASB in 2016.
Explain how to calculate the annual depreciation expense under the new accounting rule that will classify the lease as a financing lease.