Lease accounting

The FASB’s new lease accounting standard, ASU 2016-02, Leases (Topic 842), was issued on February 25, 2016. The new leasing standard presents dramatic changes to the balance sheets of lesseesLessor accounting is updated to align with certain changes in the lessee model and the new revenue recognition standard.

Our lease accounting page is your resource for implementing the new leasing guidance. Here you will find helpful information and insights on the new lease accounting rules including executive level insights through our In the loop series, and a deeper dive into the leasing standard’s overall requirements with our In depth publication. Now available: a comprehensive accounting and reporting guide on lease accounting to help you with your company’s implementation. Coming soon: industry focused In depth supplements. Visit for details on how PwC can assist with your approach to the new standard.

  • A lessee will recognize on its balance sheet the present value of lease payments as a lease liability and a right-of-use asset (based on the lease liability with certain adjustments). A lessee will classify a lease as either operating or finance based on criteria that are largely similar to those applied today, but without explicit bright lines.

  • Lessors will continue to classify leases as operating, direct financing, or sales-type. Leveraged lease accounting is eliminated, although grandfathered for existing arrangements.

  • The new guidance provides a new sale-leaseback model applicable to both lessees and lessors. If the transaction fails sale treatment, the buyer and seller will reflect it as a financing.

  • Extensive quantitative and qualitative disclosures are required to provide greater insight into revenue and expense recognized and expected to be recognized from existing contracts.

The standard is effective for US GAAP public reporting entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. For private companies, the standard is effective for fiscal years beginning after December 15, 2019 and interim periods beginning the following year. Early adoption is permitted. Transition requires application of the new rules at the beginning of the earliest comparative period presented.

Listen to our podcast for an overview of the new leasing model

Need to get up to speed on the new leasing standard? This podcast will take you from zero to sixty on the new models for lessee and lessor, and how they can impact you.

In brief: Lease accounting: The long-awaited FASB standard has arrived


The FASB issued its new lease accounting standard. There are elements of the standard that could impact almost all entities to some extent, although lessees will likely see the most significant changes. Read our In brief article to learn more about the changes to lease accounting.

In depth: Retail and consumer industry supplement to leasing standard


This supplement to our In depth on leases highlights areas that could create challenges for retail & consumer companies.

Podcast: Leasing: an overview of the new model


Need to get up to speed on the new leasing standard? This podcast will take you from zero to sixty on the new models for lessee and lessor, and how they can impact you.

The overhaul of lease accounting: Catalyst for change in corporate real estate


This publication discusses the newly-released lease accounting standard and presents considerations for companies that are significant users of real estate.

Podcast: FASB Standard setting update, First quarter 2016


Trying to find an update on FASB standard setting? Stop looking and start listening... Hear about the standards issued in Q1 2016 including leasing, revenue updates, EITF issues and more.

Navigating the brave, new world of equipment lease management - Webcast replay


In this recorded webcast we discuss the changing approach to gathering, managing, and reporting the financial details associated with equipment leasing, in response to the FASB and IASB announcing new accounting requirements.

New Leases Accounting Standard: Potential Consequences of FASB Leases (ASC 842) for Portfolio Companies


On February 25, 2016, the FASB issued a new standard, Leases (ASC 842). Certain provisions of the new standard are particularly noteworthy for portfolio companies owned by private equity investors.

Leases - 2016 edition


PwC's comprehensive guide to the new US GAAP leases guidance.

Lease accounting


A roundup of PwC reports and insights on accounting for leases - a joint project of IASB and FASB - is available at CFOdirect.

Leasing - build to suit and sale leaseback


Hear PwC insights on build-to-suit and sale leaseback guidance.

The quarter close: Directors edition Q1 2016


This quarterly publication is designed to keep directors informed about the latest accounting and financial reporting issues.