A lease accounting proposal is a document where one or both parties in a lease agreement make a proposal to show how they will report their leases in the annual financial statements. These rent and taxes figures have an impact on the overall financial results of the individual or company and play an important role in loan contracts. Lease accounting can be recorded either on or off the balance sheet. Nowadays, there have been many lease accounting proposals which say that the lease accounting should not be done off the balance sheet as it does not paints the right picture of the company’s finances. The purpose of the lease accounting proposal is very important.

Sample Lease Accounting Proposal:

Name of proposal maker: Arthur Gooding

Address: 928 Congress Road, Austin

Name of proposal: Eliminating operating lease accounting

Proposal prepared on: February 14, 2012

Proposal submitted on: February 15, 2012

Purpose: The purpose of this proposal is to remove the current norm of operating lease accounting and consider every real estate lease as a capital lease for accurate depiction of the company’s financial statements

Details of Lease Accounting Proposal:

  • If the proposal is accepted, it can be estimated that public sector companies will $1 trillion of assets and liabilities to their statements
  • Lease terms will be shorter as the new rules show that longer terms result in greater liabilities on the company’s balance sheet
  • Renewal options will be under closes study and must be reflected in the balance sheet
  • Capital lease accounting shall transfer most of the risks and reward to the lessee