The proposed changes will require lessees to record most leases on their balance sheets by recognizing a "right-of-use" asset and corresponding liability. This eliminates the distinction between operating and capital leases. For lessees, rent expense will be replaced by recording amortization on the right-of-use asset and interest expense on the lease liability similar to a mortgage. For lessors, the performance obligation and derecognition approaches may be used depending on risks retained, with little change from current lessor accounting. The changes may impact companies' willingness to enter long-term leases but economic substance should still drive those decisions.