The Economics of and Accounting for Lease Transactions

Cheng-Few Lee () and Ryan McDonough ()
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Cheng-Few Lee: Rutgers University
Ryan McDonough: Rutgers University

Chapter 86 in Encyclopedia of Finance, 2022, pp 2019-2040 from Springer

Abstract: Abstract This chapter explores a company’s decision to enter into a lease contract to finance capital investments. We discuss the motivations behind the lease-versus-buy tradeoff in terms of both the economics of and accounting for lease financing arrangements. Throughout our discussion, we reference academic research related to the lease-versus-buy decision, the factors influencing the extent of leasing activity, the economic consequences of lease financing, and the role of lease-related accounting standards. We also provide a detailed review of the provisions in the current lease accounting standards that were recently issued by the Financial Accounting Standards Board and the International Accounting Standards Board.

Keywords: ASC 842; IFRS 16; Investment; Finance leases; Lease financing; Lease-versus-buy; Operating leases (search for similar items in EconPapers)
JEL-codes: E22 G32 G38 M41 M48 (search for similar items in EconPapers)
Date: 2022
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Persistent link: https://EconPapers.repec.org/RePEc:spr:sprchp:978-3-030-91231-4_88

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DOI: 10.1007/978-3-030-91231-4_88

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