A Perspective on the Joint IASB/FASB Exposure Draft on Accounting for Leases
The International Accounting Standards Board (IASB) and the Financial Accounting Standards Board (FASB) recently issued a joint exposure draft on accounting for leases. This exposure draft seeks to shift lease accounting from an “ownership” model to a “right-of-use” model. Under the current ownershi...
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| Veröffentlicht in: | Accounting horizons 2011-12, Vol.25 (4), p.861-871 |
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| creator | Biondi, Yuri Bloomfield, Robert J Glover, Jonathan C Jamal, Karim Ohlson, James A Penman, Stephen H Tsujiyama, Eiko Wilks, T Jeffrey |
| description | The International Accounting Standards Board (IASB) and the Financial Accounting Standards Board (FASB) recently issued a joint exposure draft on accounting for leases. This exposure draft seeks to shift lease accounting from an “ownership” model to a “right-of-use” model. Under the current ownership model, leases can be reported on balance sheet (finance leases) if certain tests are met, or off balance sheet (operating leases) if those tests are not met. The new model seeks to report all leases on the balance sheet based on the present value of lease obligations without any bright line tests, and no sharp on or off the balance sheet classifications.
We are sympathetic to the standard setters' concern that the current lease standard is being manipulated improperly by managers, resulting in large amounts of debt being reported off balance sheet. We provide a discussion of current lease accounting and the proposed exposure draft. We also comment on five key issues covered by the exposure draft: the definition of a lease, the initial measurement and eventual reassessment at fair values, the accounting for lessors, the impact of lease accounting on recognition and income measurement, and classification of lease accounting elements and their impact on accounting ratios.
JEL Classifications: M40. |
| doi_str_mv | 10.2308/acch-50048 |
| format | Article |
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We are sympathetic to the standard setters' concern that the current lease standard is being manipulated improperly by managers, resulting in large amounts of debt being reported off balance sheet. We provide a discussion of current lease accounting and the proposed exposure draft. We also comment on five key issues covered by the exposure draft: the definition of a lease, the initial measurement and eventual reassessment at fair values, the accounting for lessors, the impact of lease accounting on recognition and income measurement, and classification of lease accounting elements and their impact on accounting ratios.
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We are sympathetic to the standard setters' concern that the current lease standard is being manipulated improperly by managers, resulting in large amounts of debt being reported off balance sheet. We provide a discussion of current lease accounting and the proposed exposure draft. We also comment on five key issues covered by the exposure draft: the definition of a lease, the initial measurement and eventual reassessment at fair values, the accounting for lessors, the impact of lease accounting on recognition and income measurement, and classification of lease accounting elements and their impact on accounting ratios.
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This exposure draft seeks to shift lease accounting from an “ownership” model to a “right-of-use” model. Under the current ownership model, leases can be reported on balance sheet (finance leases) if certain tests are met, or off balance sheet (operating leases) if those tests are not met. The new model seeks to report all leases on the balance sheet based on the present value of lease obligations without any bright line tests, and no sharp on or off the balance sheet classifications.
We are sympathetic to the standard setters' concern that the current lease standard is being manipulated improperly by managers, resulting in large amounts of debt being reported off balance sheet. We provide a discussion of current lease accounting and the proposed exposure draft. We also comment on five key issues covered by the exposure draft: the definition of a lease, the initial measurement and eventual reassessment at fair values, the accounting for lessors, the impact of lease accounting on recognition and income measurement, and classification of lease accounting elements and their impact on accounting ratios.
JEL Classifications: M40.</abstract><cop>Sarasota</cop><pub>American Accounting Association</pub><doi>10.2308/acch-50048</doi><tpages>11</tpages></addata></record> |
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| ispartof | Accounting horizons, 2011-12, Vol.25 (4), p.861-871 |
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| source | EBSCOhost Business Source Complete |
| subjects | Accounting standards Balance sheets Classification Committees Exposure drafts Fair value FASB exposure drafts Financial accounting Financial accounting standards Financial reporting Financing leases International accounting standards Leases Leasing Lessees Operating leases Present value Rentals Standardization U.S.A |
| title | A Perspective on the Joint IASB/FASB Exposure Draft on Accounting for Leases |
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