Accouting for leases may change soon

An article at CFO updates us on the current progress of an accounting rule that could change the way companies account for leases. Any company that leases plants, property or equipment would be responsible for FASB predicts this new rule will be in place by 2011.

Under the current rule, companies distinguish between capital lease obligations, which appear on the balance sheet, and operating leases (or rental contracts), which do not. Based on FASB's and IASB's discussion paper on the topic, released earlier this year, the new rule will likely require companies to also capitalize assets that have traditionally fallen under the "operating lease" category, making them appear more highly leveraged.

Read the full article here.