IFRS industry insights: The leases project — An update for the manufacturing industry
In August 2010, the IASB and FASB (the 'Boards') took a major step towards overhauling the existing lease accounting rules by issuing a set of proposals in the form of an exposure draft (ED). The proposals would significantly affect the accounting for lease contractors for both lessees and lessors across all industries.
Since issuing the ED, the Boards have conducted extensive outreach. The comment period, which ended on 15 December 2010, garnered over 750 responses, and resulted in roundtable sessions that included participants from all constituencies, including preparers, users and auditors from a wide cross section of industries.
Respondents from the manufacturing industry expressed concern over a number of proposals in the ED, including the definition of a lease and service components, expense recognition pattern for lessees, variable lease payment and lease term.