itsual Lease Accounting Basics
Overview
Modern lease accounting brings most leases on balance sheet. Finance must capture contracts, measure liabilities, and explain expense patterns.
When to Use
- New facility or equipment leases
- Lease accounting implementation
- Explaining EBITDA vs cash rent differences
- Audit support for lease portfolios
Core Concepts
- Lease identification and term
- Discount rate and liability measurement
- Right-of-use asset
- Expense recognition patterns
- Short-term and low-value practical expedients (where allowed)
Principles
- Incomplete lease inventories break the accounting
- Amendments and extensions need process, not ad-hoc treatment
- Non-finance stakeholders sign leases — capture is a control problem
- Bridge cash rent to accounting expense for leadership
Verification
- Lease population is complete
- Measurement inputs are documented
- Reporting bridges cash and accounting views