Lease Accounting: Back into the Past—A General Review of Different Theoretical Approaches

Abstract

Purpose – For better mapping the path of lease accounting research, the purpose of this paper is to offer a general review of the existing different ways accounting literature has framed leasing operations in the book-keeping model and, especially, in the accounting equation. Design/methodology/approach – The literature reviewed consists of all the studies published in accounting academic journals available in the database ‘Business Source Premier’ from 1950 to July 2016 and presenting the word ‘lease’ or ‘leasing’ in the title, and the term ‘accounting’ in the main text. Findings – The research has proved that while there is an overall agreement that, for accounting purposes, leasing has to be considered in the wider category of executory contracts, three main different theoretical approaches can be distinguished in literature: (i) the property right view; (ii) the firm commitment approach; and (iii) the risk and rewards approach. Originality/value – In order to fill the gap found in the literature and the non-existence of a study clarifying the main positions concerning the theoretical interpretation and the consequent accounting recognition of leasing in its predominantly financial and trilateral configuration, this paper makes an original contribution to the lease accounting research: providing a first organic reconstruction of the main academic studies dealing with this specific issue.