Big company balance sheets are set to be transformed with accounting bodies on both sides of the Atlantic agreeing to begin an overhaul of accounting rules that could potentially force corporations to recognise billions of dollars in liabilities that they had kept off their books.

The US-based Financial Accounting Standards Board (FASB)and the London-based International Accounting Standards Board (IASB) have agreed to revamp the rules for leases.

And the flow-on effect could be immense.

Some analysts estimated that companies might have $1 trillion or more in off-balance-sheet leases, according to one report. Adding these payment obligations to the balance sheet would be like increasing the amount of debt on the books.

That would hurt some companies, but then truth hurts.

Lots of these leases relate to hundreds of billions of dollars of real estate. But there's also equipment which means the new rules would affect everyone from real estate to airlines to transport companies.

Leasing, pensions and related party disclosures have been on the IASB agenda this week.

All this reflects greater apparent co-operation between accounting bodies and the convergence of accounting standards on both sides of the Atlantic.

But as FASB member Michael Crooch told me in an interview in June, all that's still pretty much in the air.

Still, as Jack Ciesielski says in his AAO blog, the move to revamp lease accounting is pretty much a "slam-dunk decision".

"Over the years, analysts sometimes adjust the balance sheet to account for the obligation - but it's a haphazard, imperfect exercise. In the end, not all players in the capital markets are on the same page; maybe if balance sheets reflected better accounting for lease transactions from the start, their decisions might be quite different. Investors shouldn't have to jury-rig balance sheets to make them say something when they're dealing with fairly standard transactions. That's why accounting standards exist."

Hear, hear. Better than having a balance sheet that's a fiction.