IFRS in Focus — IASB issues exposure daft on lease accounting (August 2010)
On 17 August 2010, the International Accounting Standards Board (IASB) and US Financial Accounting Standards Board (FASB) published a joint exposure draft ED/2010/9 Leases.
The ED would eliminate the distinction between operating leases and finance leases and would introduce new accounting models for lessees and lessors. Lessees would no longer be permitted to treat leases as “off-balance sheet” financings but instead would be required to recognise an asset and liability for all leases within the scope of the proposals.
The Boards have been discussing lease accounting since 2006 when the project was added to the Memorandum of Understanding. Many believe that current lease accounting is too reliant on bright lines and subjective judgements that result in economically similar transaction being accounted for differently. The Boards published a Discussion Paper in March 2009 which focused on the lessee accounting and have since decided to address both lessee and lessor accounting.