Abstract The article focuses on current challenges to accounting principles. These accounting problems are raised by build-sale-leaseback agreements, various forms of accelerated depreciation and last-in, first-out method. The author explores the development of these techniques and their development to present generally accepted principles of accounting. Over the years there is a trend towards long-term leasing of property as opposed to direct ownership. The motivating factors in many of these leasing arrangements, particularly in the case of build-sale-leaseback contracts, have been to permit the corporation to free its capital from fixed asset investment and to permit its use in operational areas in which the company is more experienced or to channel it into further capital expansion cycles of a like nature. It is doubtful whether these are the primary factors in lease financing. A more direct factor in many instances appears to be the securing of a higher charge against operations than is possible through annual depreciation charges based upon historical cost.
V. E. Odmark (1960) studied this question.