The IASB and the FASB agreed on an approach for accounting for lease expenses, as part of a project to revise lease accounting in IFRSs and the US GAAP.
The boards undertook the leases project to address the widespread concern that many lease obligations currently are not recorded on the balance sheet, and that the current accounting for lease transactions does not represent the economics of all lease transaction. Decisions on the leasing project reached to date are preliminary. The boards plan to release a joint exposure draft in the fourth quarter of this year.
The boards previously agreed that leases should be recorded on the balance sheet, but have continued to discuss the classification and pattern of expenses in the income statement. The boards decided upon an approach in which some lease contracts would be accounted for using an approach similar to that proposed in the 2010 Leases exposure draft and some leases would be accounted for using an approach that results in a straight-line lease expense.
Hans Hoogervorst, Chairman of the IASB, commented: “The boards have reached agreement on a proposed approach to put leases over one year on the balance sheet. We will publish our proposals for public comment, with a view to completing this important convergence project during 2013.”
“The boards carefully considered the diverse views of stakeholders about whether the income statement profile of all leases should be the same. On balance, we decided that leases that convey a relatively small percentage of the life or value of the leased asset should be recognised evenly over the lease term”, said FASB Chairman Leslie F Seidman.
Press release
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