Abstract
Operating lease obligations avoid balance sheet recognition. Critics assert that these off-balance sheet arrangements lack transparency. To address the criticism, the Financial Accounting Standards Board (FASB) issued a leasing proposal that requires balance sheet reporting of most right-of-use leased assets and debt, and improves alignment with the International Accounting Standards Board (IASB) standards. This paper summarizes the current status of the FASB lease proposal and illustrates the anticipated impact on airlines - an industry heavily reliant on operating leases. Finally, the paper recommends steps for implementing the standard.