Citing Costs, FASB's Golden Supports U.S. Lease Accounting Model Over IASB's

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June 8 — The lease accounting model that the Financial Accounting Standards Board developed is cheaper for U.S. multinational companies to apply than the International Accounting Standards Board's model, FASB Chairman Russell Golden said at a corporate reporting meeting in Stamford, Conn.

That cost reduction outweighs “what you would have to do for your domestic leasing transactions, and that's why I continue to be supportive of the current FASB model, which is different than the international model,” said Golden at a June 4 meeting of Financial Executive International's Committee on Corporate Reporting.

Though it’s beneficial to produce a converged standard with comparable information, and there is a cost if that isn’t achieved, “in this case, I think that additional cost— if we were to agree with the IASB—would have been too great for the U.S. multinationals,” Golden said.

Juggling Issues to Determine Effective Date

Other than transition and effective date, FASB and IASB have wrapped up joint discussions on lease accounting, according to comments made by coifernce members.

The boards are expecting preliminary staff drafts before the document is sent for external review, potentially sometime in July. Final lease accounting rules are expected to be issued by the end of the year.

In thinking about an effective date, the boards will consider a number of things, not just the leases standard, Golden said.

“We'll have to think about the potential new effective date for revenue recognition, we'll have to think about the effective date and timing of classification and measurement and impairment, as well as other things we're doing related to reducing complexity before we establish the effective date related to leasing transactions,” Golden said.

Scope and Definition Most Significant

The boards don't plan to establish a transition resource group specific to lease accounting as they have done for revenue rules and that they will be doing for impairment accounting, according to the discussions.

Reason for the decision against a leasing transition group is because the most significant change with lease accounting will be what is covered by the standard and how a lease is defined, said Golden.

“There still will be a potential number of questions in certain industries around the scope or definition of a lease, and part of the external review will test that, and that will give us an opportunity to be able to put more examples and more clarity around that,” he said.

To contact the reporter on this story: Denise Lugo in Stamford, Conn., at

To contact the editor responsible for this story: Steven Marcy at

For a discussion on lease accounting, see 5114-2nd, Accounting for Leases: Fundamental Principles, at 5114.


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