EFRAG criticizes the lack of a more comprehensive analysis. It would be particularly unfortunate if the result of the DP was simply to replace one difficult border with another, EFRAG notes.
EFRAG criticizes the lack of a more comprehensive analysis given that fundamental decisions about the direction and key principles underlying the new lease accounting model have been taken from only the lessees’ perspective.
EFRAG is concerned that applying the ‘right-of-use approach’ to all leases will make the distinction between leases and service arrangements even more important than it is currently. It would be particularly unfortunate if the result of the DP was simply to replace one difficult border with another, EFRAG notes.
EFRAG members are divided on the DP’s proposal that a components approach should not be used to account for options in lease agreements. Some members believe that the approach proposed is pragmatic and makes it possible to propose important improvements in lessee accounting. Some other members believe that the approach proposed will result in amounts being recognised as liabilities that are not liabilities, and that this will reduce the usefulness of the information provided.
Deadline for comments is 6 July 2009.
The draft comment letter is attached below.
© EFRAG - European Financial Reporting Advisory Group
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