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IFRS industry insights — The leases project — An update for the shipping industry

Published on: Mar 14, 2011

In August 2010, the IASB and FASB took a major step toward 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 on the ED ended on December 15, 2010, and garnered over 750 responses. Subsequently, the boards hosted roundtable sessions that included participants from all constituencies, including preparers, users, and auditors from a wide cross section of industries.

Respondents from the shipping industry expressed concern over a number of proposals in the ED, including the definition of a lease, lease term, variable lease payments, and lessor accounting. The boards recently discussed the first three of those topics (the boards expect to tackle lessor accounting in April) and made some tentative decisions that differ from the proposals in the ED.

The boards will reach out to constituents over the next several weeks to gather feedback on these topics.

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