Lease Accounting : A comparative Study of US GAAP and IFRS

In the recent years, lease accounting particularly has undergone a significant transformation with the rollout of ASC 842 by the Financial Accounting Standards Board (FASB) and IFRS 16 by the International Accounting Standards Board (IASB). These updated standards were designed with the objective to improve transparency and bring more consistency to how leases are reported in the financial statements - especially in response to long-standing concerns that earlier rules let companies keep large lease liabilities off their balance sheets and not allowing the users of financial statements to get the actual financial position of the company. This research paper takes a closer look at the comparison between ASC 842 and IFRS 16 and to explore their underlying principles, the way they classify and measure leases and the broader effects they have on financial reporting in the financial statements. The focus is on four key sectors that rely heavily on leasing and those are ‘Aviation, Maritime, Retail and Real Estate. These industries have felt the impact of the new standards more than most and these effects are both in terms of day-to-day operations as well as overall financial health. This study will use the secondary data to breaks down how the updated lease accounting rules have influenced financial ratios, disclosure practices and even business strategies. It also examines the real-world hurdles that companies have faced in adapting to these changes, along with the ongoing challenges in aligning US GAAP and IFRS. The goal is to offer practical insights for the users of the study and those can be but not limited to students, professionals and anyone interested in understanding how lease accounting is evolving on a global scale.