Date recorded:

The Board was joined by video link by the FASB staff. The Board discussed the summary of 290 comment letters received to the discussion paper Leases Preliminary Views. The Board did not take any decision during this session.

The staff highlighted the following issues where the majority of constituents expressed different preferences from those articulated by the Board:

  • Lessor accounting - the decision to defer consideration of lessor accounting
  • Probability-weighted estimate of contingent rentals payable
  • Inclusion of the contingent rental in the lessee's obligation

The staff also highlighted the need for further guidance for distinguishing service contracts and leases in addition to that included in IFRIC 4 as this distinction would become much more pertinent under the new rules.

In addition, most constituents seemed to prefer a derecognition approach for lessor accounting. The Board considered the comments by the investment property companies that new leases accounting should not apply to lessors currently applying the fair value model in IAS 40. The Board agreed that it would assess the need for a separate model for the industry on one of the future meetings.

The Board considered the proposed timing of the new standard. It reaffirmed the timetable for lessee accounting with the ED expected in June 2010 and final standard in June 2011.

Regarding lessor accounting, the staff will provide additional analysis for the October meeting. The Board noted that the timetable for the lessor accounting would be based on the outcome of the discussions on the basic features of the lessor's accounting model. At that time, the Board will decide how to proceed with the lessor accounting (whether to issue a separate discussion paper or exposure draft on lessor accounting) and will decide on timing of the project.

One Board member was particularly concerned about the consistency between derecognition model for lessor accounting and the overall derecognition model that would be adopted as part of the IAS 39 replacement project. The Board agreed to address this issue as part of its deliberations.

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