Boards Move Closer to Completing Leases Project Another item of high interest is sale-leaseback transactions. The new revenue recognition standard prohibits the recognition of seller’s profit when the seller-lessee determines the leaseback is a Type A lease. Based on the revenue recognition standard’s transfer of control criteria, the existence of a purchase option in a Type B lease also could preclude the seller-lessee from recognizing a sale—especially if the seller-lessee retains physical possession of the asset. Seller-lessees will need to evaluate all sale-leaseback transactions for potential restatement. Companies are encouraged to start preparing for the new standard by gathering contractual documents and cataloguing existing leases.

Companies also should evaluate resource requirements, including information systems, to ensure they have the appropriate infrastructure to successfully implement the new standard. For additional guidance, consult your BKD advisor. Additional Resources BKD Hot Topics: Lease Accounting Contributor Connie Spinelli Director 303.861.4545 cspinelli@bkd.com 6 .