Rulemakers around the world yesterday issued a new proposal on accounting for leases that would require many companies to report vastly larger amounts of assets and liabilities than they do now, the New York Times reported yesterday. Under current rules, companies are generally able to classify virtually all leases as operating leases and keep them off their balance sheets, something that regulators and accounting critics have long criticized. Some airlines, for example, lease all their airplanes and show no airplane assets on their balance sheets and no liabilities for the money they are committed to pay for those planes in the future. Under the proposal, issued jointly by the International Accounting Standards Board, which sets rules for many countries around the globe, and by the Financial Accounting Standards Board, which writes the U.S. rules, an airline entering into a lease for a plane would show an asset of the right to use the plane and an equal liability based on the current value of the lease payments it has promised to make. That accounting would be similar to what it would show had it borrowed money to buy the plane.
