Advocacy Report: A Timeline of Lease Accounting

The joint Financial Accounting Standards Board (FASB) and International Accounting Standards Board (IASB) project on Lease Accounting was forecast to be completed, with new rules regulating lease accounting in the U.S. and internationally, by the end of 2014, but it is unclear if that will come to pass.

The project, which has the goal of changing lease accounting requirements to promote transparency and also developing compatible accounting standards for both domestic and international financial reporting, has been met with several delays over the course of its life. In May 2013, FASB and the IASB issued their second Exposure Draft (“ED”), which, though an improvement over the first ED (issued in August 2010), still raises significant concerns; mainly that it will require companies to use a “right-of-use” model of accounting, forcing them to capitalize commercial leases onto their balance sheets. This could force lessees to shorten lease terms to minimize costs, which in turn may affect how much collateral they can raise (as leases and the value of the property are frequently used as collateral in financing).

Although the comment period for the current Exposure Draft has closed, NAR continues to work in coalition with other industry groups, meets with Members of Congress, and communicates with the FASB/IASB to ensure that any modifications to lease accounting rules will not negatively impact commercial real estate practitioners.

JANUARY 1, 1977

Financial Accounting Standards Number 13 (“FAS 13”) is issued, regulating lease accounting standards. — Under FAS 13, unless it meets certain criteria, a lease is considered an “operating expense” and is not characterized on balance sheets.


The SEC issues a report following the Enron scandal recommending making changes to lease accounting requirements to ensure greater transparency in the transactions.

JULY 2006

The FASB and IASB announce their joint project on lease accounting standards; the projected completion date is June 2011.

AUGUST 17, 2010

The first ED is published; it treated all leases as capital leases, among other changes.

SEPTEMBER 24, 2010

NAR sends a Comment Letter to FASB stating concerns that the changes proposed in the August

2010 ED would dramatically affect the availability of capital for commercial real estate, and urged for more flexible mark-to-market accounting rules.

OCTOBER 21, 2010

NAR joins a 25-organization coalition letter to the G-20 nations, asking FASB and the IASB to delay their June 2011 deadline for completion of the new lease accounting standards.

DECEMBER 1, 2010

NAR submits a Comment Letter to FASB raising concerns over the effect its proposed lease accounting rule change would have by bloating balance sheets and cause debt-to-equity ratios to rise among commercial real estate companies.

DECEMBER 8, 2010

NAR signs onto an industry coalition letter to the FASB and IASB asking them to reconsider their proposal to capitalize all leases onto companies’ balance sheets.

MAY 19, 2011

FASB/IASB meet to reconsider their original lease accounting proposal.

NOVEMBER 30, 2011

NAR signs onto an Accounting Coalition letter to the FASB/IASB requesting an extension of the comment period for the three proposed accounting rules changes promulgated by FASB; an extension is granted to February 2012.


NAR and other industry groups publish a report on the proposed lease accounting changes which finds they will negatively impact job creation, the health of the U.S. commercial real estate sector, and liabilities of U.S. publicly traded companies.

APRIL 28, 2012

NAR signs onto a coalition letter to the FASB/IASB calling for an economic impact study, extensive field testing, and full re-exposure of the entire lease accounting proposal, with the goal of creating a standard that meets the tests of the marketplace while fulfilling the needs of all stakeholders.

MAY 17, 2012

Reps. Sherman (D-CA) and Campbell (R-CA) send a bipartisan letter signed by 60 lawmakers to the FASB/IASB urging them to conduct a comprehensive economic analysis of their lease accounting proposal before making it a final rule.

SEPTEMBER 10, 2012

NAR and a coalition of business organizations send a letter to the FASB/IASB urging them to fundamentally rethink their lease accounting project, raising serious concerns about its objective and whether investors will receive any additional decisionuseful information under the new proposed standard.

MAY 14, 2013

13 U.S. Senators send a letter to the FASB expressing concerns that the second ED will be released without any cost-benefit analysis being done on the proposed lease accounting changes.

MAY 16, 2013

The second ED is published; it made improvements over the first draft, but still uses a “right-of-use” model of accounting, which will force many commercial leases to be brought onto balance sheets.

SEPTEMBER 13, 2013

NAR sends a comment letter to the FASB reiterating its concerns with the lease accounting proposal, its potential negative impact on the commercial real estate sector, and again asking for a cost-benefit analysis to be conducted on the proposed rules.


New Standard Issued (Projected)


Likely effective date of the new lease standard

Notice: The information on this page may not be current. The archive is a collection of content previously published on one or more NAR web properties. Archive pages are not updated and may no longer be accurate. Users must independently verify the accuracy and currency of the information found here. The National Association of REALTORS® disclaims all liability for any loss or injury resulting from the use of the information or data found on this page.


About Create

Create is a quarterly publication for commercial practitioners, members of the National Association of REALTORS® and commercial real estate industry leaders. Members can subscribe by updating your member profile information to include commercial interests in the "Field of Business" list.

Update your Field of Business in your member profile.