The Accounting Policy & Practice Report ® provides financial accounting policy makers, advisors, and practitioners with the latest news, expert insights, and guidance on emerging, evolving, and complex accounting issues. Expert News & Commentary.
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.
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.
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 firstname.lastname@example.org
To contact the editor responsible for this story: Steven Marcy at email@example.com
For a discussion on lease accounting, see 5114-2nd, Accounting for Leases: Fundamental Principles, at 5114.
All Bloomberg BNA treatises are available on standing order, which ensures you will always receive the most current edition of the book or supplement of the title you have ordered from Bloomberg BNA’s book division. As soon as a new supplement or edition is published (usually annually) for a title you’ve previously purchased and requested to be placed on standing order, we’ll ship it to you to review for 30 days without any obligation. During this period, you can either (a) honor the invoice and receive a 5% discount (in addition to any other discounts you may qualify for) off the then-current price of the update, plus shipping and handling or (b) return the book(s), in which case, your invoice will be cancelled upon receipt of the book(s). Call us for a prepaid UPS label for your return. It’s as simple and easy as that. Most importantly, standing orders mean you will never have to worry about the timeliness of the information you’re relying on. And, you may discontinue standing orders at any time by contacting us at 1.800.960.1220 or by sending an email to firstname.lastname@example.org.
Put me on standing order at a 5% discount off list price of all future updates, in addition to any other discounts I may quality for. (Returnable within 30 days.)
Notify me when updates are available (No standing order will be created).
This Bloomberg BNA report is available on standing order, which ensures you will all receive the latest edition. This report is updated annually and we will send you the latest edition once it has been published. By signing up for standing order you will never have to worry about the timeliness of the information you need. And, you may discontinue standing orders at any time by contacting us at 1.800.372.1033, option 5, or by sending us an email to email@example.com.
Put me on standing order
Notify me when new releases are available (no standing order will be created)