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

Published on: Apr 28, 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. The boards subsequently hosted 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 payments, and lease term.

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