Teaching Note: a CFO’s dilemma: airport lease accounting in India

This case is set in India’s airport infrastructure sector and examines a strategic accounting and regulatory dilemma faced by Rajiv Mehta, Chief Financial Officer (CFO) of a leading private airport operator. In 2023, as the airport prepared its tariff submission to the Airports Economic Regulatory Authority of India (AERA), Mehta confronted an unexpected challenge arising from the adoption of Indian Accounting Standards [Ind AS] 116 (equivalent to Ind AS 16). While the new lease accounting standard required recognition of right-of-use (ROU) assets and lease liabilities in the airport’s financial statements, AERA’s tariff framework had been designed under the earlier accounting...