The Financial Accounting Standards Board (FASB) is a private sector group that makes the rules and reporting standards for accountants. It seems they have been busy trying to figure out a way to make life miserable for companies with commercial leases. Currently, leases are off balance sheet items, appearing only in footnotes to the financial statements, if at all. The FASB is proposing to change that so that operating leases, which includes most real estate leases, that will treat leases as if the company had purchased and financed the leased asset. They will require the lease to be set up as an asset called a “right of use asset” and will require a corresponding liability related to the rent payments and any direct costs such as brokerage fees. An article in the June issue of Realtor magazine by Marc Betesh (page 22) talks about this as if it is likely to be enacted this year and go into effect next year. Maybe this is a good thing and will cause more people to buy rather than lease. Any thoughts?
Bruce Kaplan and Joe Billitteri: Commercial Real Estate Agents with Premier Commercial Realty. Your Profit is our Success!
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