EFRAG and the European National Standard Setters invite companies to share their views on lessee accounting

  • EFRAG (European Financial Reporting Advisory Group) (dk green) Image

30 Jun, 2014

The European Financial Reporting Advisory Group (EFRAG) and the European standard setters (ANC, ASCG, FRC and OIC) are performing an additional public consultation on the two different approaches for lessees proposed by the IASB and FASB.

The objective of the consultation is to obtain examples where contracts or transactions could qualify as leases under a single-model approach (IASB) or a dual-model approach (FASB), but are viewed by constituents as in-substance services. In addition, the EFRAG and European standard setters are seeking input on which of the two alternative approaches is preferred.

During the March 2014 joint meeting, the IASB and FASB did not reach a consensus regarding lessee accounting. The IASB supported a single-model approach under which lessees would account for all leases as Type A (or finance-type) leases, while the FASB supported a dual-model approach; however, lessees would classify a lease by using criteria similar to the lease classification criteria in IAS 17. The FASB also indicated that they expect most current capital leases to be treated as “Type A” leases and most operating leases to be treated as “Type B” leases.

The public consultation will begin on 30 June 2014 and will last until 22 August 2014. The feedback received will be shared among the EFRAG and the National Standard Setters.

For more information, see:

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