The International Accounting Standards Board appears on track to reject a compromise forged with the Financial Accounting Standards Board last year on lease expensing, having just released a tentative proposal for a single model for lease expenses. FASB favors the current dual model. Experts believe the impact will not be significant when the standard rolls out.
The Financial Accounting Standards Board and the International Accounting Standards Board are still accepting comment letters on a proposed lease-accounting standard. In addition, they have scheduled five public meetings in the fall to discuss the proposal.
The Financial Accounting Standards Board and the International Accounting Standards Board reversed a compromise offered to the leasing industry, deciding they won't establish a two-model approach for lease accounting. Instead, they are sticking to their original, single-model proposal. The boards originally proposed that all leases be treated as financing transactions. Companies protested that short-term leases should be treated as simple rental agreements, so the boards agreed to develop a two-model approach.
International accounting authorities appear willing to ease proposed leasing rules that members of the commercial real estate industry say are too complex and would hurt the economic recovery. The Financial Accounting Standards Board and the International Accounting Standards Board (FASB/IASB) are seeking more industry feedback and have asked their staffs to take a new look at the proposals.
The International Accounting Standards Board and the Financial Accounting Standards Board agree on proposed standards for fair value measurement but must negotiate their positions on how to apply those measurements to specific financial instruments. Both boards released drafts of the proposed guidelines. The IASB also released its updated work plan.