Critical Rule: IFRS vs US GAAP Lease Expense

CFA Level I Glossary

IFRS uses a single lessee model that is finance-lease style, so expense is typically front-loaded through interest plus depreciation. US GAAP still allows many leases an operating-lease presentation with straight-line total lease expense. Both may put a right-of-use asset and lease liability on the balance sheet, but the income-statement pattern can differ. Exam questions often ask which standard shows higher early-year expense.

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