What was FASB 13?

• A. A comprehensive set of standards to be followed by lessors and lessees in accounting lease transactions.
• B. A tax code for leases.
• C. An outdated standard.
• D. A standard about cash flow statement.

Answer: (A)

FASB 13 established a comprehensive framework for lease accounting that applies to both lessees and lessors. It set out how leases should be recognized, measured, and classified, including capitalizing lease assets and liabilities for leases that met criteria for capitalization and defining operating leases with distinct accounting treatments. This standard unified lease accounting practices for many years and served as the foundation for how firms present lease obligations and their related assets on financial statements, until newer guidance later replaced it (such as ASC 842). It isn’t a tax code, nor is it specifically a cash flow statement standard, though lease accounting decisions clearly affect the presentation of cash flows. That’s why the best description is that it provided a comprehensive set of lease accounting standards for both parties involved in a lease.