FASB Issues Lease Accounting Standard
Today, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (ASU) No. 2016-02, Leases (Topic 842). The long-awaited guidance is intended to improve financial reporting for leasing transactions. The FASB estimates that there is over $1 trillion of off-balance sheet operating lease commitments for SEC registrants based on a 2005 Securities and Exchange Commission report. The new guidance will require lessees to recognize a right of use asset and related lease liability. Using the classification similar to Topic 840, the ASU identifies financing leases and operating leases. Financing leases would recognize amortization and interest expenses, while operating leases would. Read More.
Trade Groups Make Final Plea for Leases Standard Exemption
As the Financial Accounting Standards Board (“FASB”) prepares its lease accounting standard for publication, several trade groups made a last-minute attempt to have private companies exempt from the upcoming guidance. In a letter last month, the groups expressed concern that the final standard will increase complexity and not meet the needs of private business investors. The groups also believe that the extensive changes to lease accounting will hurt private companies, and cap their chances of borrowing or raising capital. The FASB has responded to several comment letters in relation to proposed Accounting Standards Update (ASU) No. 2013-270, Leases (Topic 842).. Read More.
GASB to Review Ballot Drafts on Monday
Starting at 1:00 p.m. EST, Monday, the Governmental Accounting Standards Board (“GASB”) is scheduled to hold a teleconference. Per the GASB Notice of Teleconference , the GASB plans to consider for approval the ballot drafts of an exposure draft for the proposed Statement, Leases, and a final statement, Blending Requirements for Certain Component Units. Live audio of the teleconference will be provided on the GASB Web site.
FASB Announces Agenda for Board Meeting
With a board meeting set for tomorrow at 8:00 a.m. EST, the Financial Accounting Standards Board (“FASB”) has released a notice of open meetings: Insurance—targeted improvements to the accounting for long-duration contracts. FASB will discuss long-duration contracts improvements, particularly modifying assumptions and discount rate. Leases . Discussions will continue on FASB’s May 2013 Exposure Draft, specifically reviewing nonpublic business entity discount rate, related party leasing transactions, accounting for sale and leaseback transactions, and leveraged leases. Financial statements of not-for-profit entities . Ongoing discussions will continue over not-for-profit disclosures, such as cost allocations. Open discussion. If need be, FASB will discuss small issues on technical projects or. Read More.
IASB to Adopt Single Model for Leases
Rather than move forward with the Financial Accounting Standards Board (“FASB”) on a dual model for leases, the International Accounting Standards Board (“IASB”) has decided to adopt a single model. The IASB recently updated in project documents to reflect its decision to abandon the dual model approach it proposed with the FASB in 2013. Citing feedback from analysts and investors, the IASB concluded that leases produce assets and debt-like liabilities for a lessee, making it easier for a single model to understand. As for the FASB, the standard-setter plans to keep its dual model. However, the IASB and FASB plan. Read More.
Standard Setters Still at Odds over Lease Project
At their July 23rd joint meeting, the Financial Accounting Standards Board (“FASB”) and International Accounting Standards Board (“IASB”) resumed efforts to converge U.S. GAAP and IFRS. In particular, the top focus was FASB’s Proposed Accounting Standards Update (ASU) No. 2013-270, Leases (Topic 842), and IASB’s Exposure Draft (ED) No. 2013-6, Leases. Conflicted on recognizing the gains for sale-leaseback transactions, the boards continue to have opposing attitudes toward their lease accounting project. During the meeting, FASB agreed to allow sellers of assets to recognize the full gain from the time of the transaction. On the conflicting end, IASB agreed to let. Read More.