FASB Leases Standard to Offer Clearer View of Corporate Liability, Analyst Says

Ross Prindle, managing director and practice leader in the real estate advisory group of Duff & Phelps, joined REIT.com for a video interview at REITWise 2017: NAREIT’s Law, Accounting & Finance Conference in La Quinta, California.

Prindle participated in a REITWise panel discussion on the Financial Accounting Standards Board’s (FASB) new lease accounting standard. According to Prindle, the main objective of the standard is to get all leases onto companies’ balance sheets so that investors can better determine their actual liabilities.

While the new standard is not expected to change lessor accounting, lessors are going to have to be mindful of steps taken by lessees to manage their own balance sheets, Prindle said. Prindle said he expects to see “a little bit of pull and tug” between lessors and lessees, which will evolve more once the standard goes into effect in 2019.

In terms of implementation, Prindle stressed that the first priority for companies is to gather all the data they have concerning their leases. This means data not only for real estate and equipment, but contracts that may qualify as leases in the standard, he noted.