[Verse 1] Two standards came to rule the lease accounting game IFRS Sixteen and ASC Eight-Four-Two by name Both changed the way we show the leases on our books Let's learn the differences with some helpful hooks [Chorus] Right of use asset, lease liability too Both standards make them visible for me and you But when it comes to lessees and the way they're shown IFRS keeps it simple, ASC has two zones Operating and finance, that's the ASC way IFRS treats them all the same every single day [Verse 2] Under IFRS rules, all leases look alike One model for accounting, keeps the numbers tight But ASC Eight-Four-Two splits them into two Operating leases and finance leases too [Chorus] Right of use asset, lease liability too Both standards make them visible for me and you But when it comes to lessees and the way they're shown IFRS keeps it simple, ASC has two zones Operating and finance, that's the ASC way IFRS treats them all the same every single day [Verse 3] For finance leases, both standards agree quite well Amortization and interest, they both will tell But operating under ASC is different indeed Straight line expense is what you'll need [Bridge] Lessor accounting stays mostly the same Both standards play a similar game Sales type, direct financing, operating too The differences are minor between these two [Chorus] Right of use asset, lease liability too Both standards make them visible for me and you But when it comes to lessees and the way they're shown IFRS keeps it simple, ASC has two zones Operating and finance, that's the ASC way IFRS treats them all the same every single day [Outro] Remember the split, ASC has two types IFRS keeps one model that everyone likes Lease accounting standards, now you know the way IFRS and ASC, they're here to stay
← Revenue Recognition Standards | R&D and Intangible Asset Treatment →