Which statement about proposed changes to lessee accounting is false?

Which statement about proposed changes to lessee accounting is false?

• A. All leases must be recognized on the balance sheet.
• B. The asset equals the right-to-use asset and PV of payments.
• C. There is an exception for leases under 12 months.
• D. There is no change to lessee accounting.

Answer: (D)

Under the new approach for lessee accounting, leases are recorded on the balance sheet. At lease commencement, a right-of-use asset is recognized along with a lease liability measured at the present value of the lease payments. This brings most lease obligations onto the balance sheet and ties the asset to the right to use the underlying asset over the term. There is an exception for short-term leases (twelve months or less) that allows recognition without a separate liability and asset, with payments expensed over the term. The statement claiming there is no change to lessee accounting is not correct. The changes implement balance-sheet recognition and present-value measurement for most leases, with a specific short-term exemption. The other statements reflect the actual framework: almost all leases are recognized on the balance sheet; the asset is the right-to-use asset (with the related liability based on the present value of payments); and there is a short-term lease exception.

Under the new approach for lessee accounting, leases are recorded on the balance sheet. At lease commencement, a right-of-use asset is recognized along with a lease liability measured at the present value of the lease payments. This brings most lease obligations onto the balance sheet and ties the asset to the right to use the underlying asset over the term. There is an exception for short-term leases (twelve months or less) that allows recognition without a separate liability and asset, with payments expensed over the term.

The statement claiming there is no change to lessee accounting is not correct. The changes implement balance-sheet recognition and present-value measurement for most leases, with a specific short-term exemption. The other statements reflect the actual framework: almost all leases are recognized on the balance sheet; the asset is the right-to-use asset (with the related liability based on the present value of payments); and there is a short-term lease exception.