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The future of lease accounting and its impact on corporate real estate decisions

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dc.contributor.advisor W. Tod McGrath. en_US
dc.contributor.author Canon, Timothy R. (Timothy Robert) en_US
dc.contributor.author Fenbert, Christina A en_US
dc.contributor.other Massachusetts Institute of Technology. Center for Real Estate. Program in Real Estate Development. en_US
dc.date.accessioned 2012-01-11T20:18:13Z
dc.date.available 2012-01-11T20:18:13Z
dc.date.copyright 2011 en_US
dc.date.issued 2011 en_US
dc.identifier.uri http://hdl.handle.net/1721.1/68193
dc.description Thesis (S.M. in Real Estate Development)--Massachusetts Institute of Technology, Program in Real Estate Development in Conjunction with the Center for Real Estate, 2011. en_US
dc.description This electronic version was submitted by the student author. The certified thesis is available in the Institute Archives and Special Collections. en_US
dc.description Cataloged from student-submitted PDF version of thesis. en_US
dc.description Includes bibliographical references (p. 91-94). en_US
dc.description.abstract This thesis explores the likely impacts the proposed changes to lease accounting would have on corporate real estate decisions. The Financial Accounting Standards Board (SFASB) and the International Accounting Standards Board (IASB) plan to establish a unified set of principle-based accounting systems into a unified set of principle-based standards in an effort to improve financial transparency and comparability across world markets. One component of this plan, centered on reform of current lease accounting standards, would eliminate the distinction between capital and operating leases and require almost all leases to be recognized as an asset and liability on the balance sheet. This represents a significant departure from the current accounting guidance under Generally Accepted Accounting Principles (GAAP), which requires American companies are only required to disclose only limited information about future operating lease requirements in the footnotes of financial statements. What's more, empirical evidence suggests that many companies structure leases to obtain this type of offbalance- sheet financing that operating leases afford. For companies with relatively large operating lease portfolios, the new accounting standards would have a significant impact on their balance sheets. If these companies consider accounting treatment in their real estate decisions, they may be inclined to pursue alternative real estate strategies to mitigate this impact. That being said, the corporate real estate decision-making process is complex; therefore any strategy aimed at achieving a specific accounting treatment must consider other relevant and potentially more important factors. This study analyzes the proposed changes to lease accounting and explores how corporate real estate managers consider the effects of accounting in their real estate decisions. Specific hypotheses are tested through targeted interviews with a diverse group of public and private tenants and landlords to identify the variables that would determine a particular company's incentive to change its real estate strategy in response to new accounting guidelines. Results of interviews are discussed and predictions are made regarding the future of real estate leasing strategies. en_US
dc.description.statementofresponsibility by Timothy R. Canon and Christina A. Fenbert. en_US
dc.format.extent 101 p. en_US
dc.language.iso eng en_US
dc.publisher Massachusetts Institute of Technology en_US
dc.rights M.I.T. theses are protected by copyright. They may be viewed from this source for any purpose, but reproduction or distribution in any format is prohibited without written permission. See provided URL for inquiries about permission. en_US
dc.rights.uri http://dspace.mit.edu/handle/1721.1/7582 en_US
dc.subject Center for Real Estate. Program in Real Estate Development. en_US
dc.title The future of lease accounting and its impact on corporate real estate decisions en_US
dc.type Thesis en_US
dc.description.degree S.M.in Real Estate Development en_US
dc.contributor.department Massachusetts Institute of Technology. Center for Real Estate. Program in Real Estate Development. en_US
dc.identifier.oclc 770702806 en_US


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