The Financial Accounting Standards Board (the “FASB”) released the long-anticipated final standards, Leases (Topic 842) (the “Final Standards” or “Topic 842”), on February 25, 2016, completing an overhaul of the lease accounting standards that was more than ten years in the making in the U.S. The most significant change in lease accounting brought about by the Final Standards is that all leases will now appear on the balance sheet of generally accepted accounting principles (“GAAP”) reporting entities. These changes bring an end to the decades-long treatment of accounting for the obligations of lessees under operating leases as operating expenses reflected on income statements rather than as liabilities, with corresponding assets, reflected on balance sheets. As a result, all leases are now viewed as creating an asset and a liability to be recognized on the balance sheets of lessees and lessors.
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