What are Accounting for Leases and Pensions?

Accounting for Leases and Pensions

Both U.S. GAAP and IFRS require companies to distinguish between operating leases and capital leases; the latter is referred to as finance leases under IFRS. The accounting and reporting for leases are broadly similar for both U.S. GAAP and IFRS. The main difference is the criteria for identifying a lease as a capital lease are more general under IFRS. However, the basic approach applies. Nokia describes its accounting for operating leases as follows: the payments … are treated as rentals and recognized in the profit and loss account.

For pensions, both U.S. GAAP and IFRS require companies to record costs of retirement benefits as employees work and earn them. The basic methods are similar in accounting and reporting for pensions.