Accounting for Leases FASB / IASB Joint Project

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Accounting for Leases FASB / IASB Joint Project. Private Company Financial Reporting Committee September 2007. BACKGROUND. FAS 13 issued November 1976 Existing interpretive pronouncements: 6 FINs 10 FTBs 13 EITFs 1 FSP AICPA guidance SEC guidance 6/2004 FASB/IASB: take a fresh look. - PowerPoint PPT Presentation

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  • Accounting for LeasesFASB / IASB Joint ProjectPrivate Company Financial Reporting CommitteeSeptember 2007

  • BACKGROUNDFAS 13 issued November 1976Existing interpretive pronouncements:6 FINs10 FTBs13 EITFs1 FSPAICPA guidanceSEC guidance6/2004 FASB/IASB: take a fresh look

  • BACKGROUND, contd4/2006 FASB/IASB discuss jointly7/2006 Project added to agendas12/2006 Joint Working Group formed2/2007 Joint Working Group met3/2007 FASB & IASB met separately4/2007 FASB/IASB met jointly re: scope5/2007 IASB met re: lease options6/2007 FASB & IASB met separately

  • TENTATIVE DECISIONSRight-of-Use Model (3/2007)Lessee accounting:Asset for right to use leased itemLiability for payment obligationsNo liability for obligation to return itemLessor accounting:Asset for right to receive paymentsAsset for end-of-term residual valueNo liability for obligation to permit use of item

  • TENTATIVE DECISIONS, contdScope (4/2007)Focus on arrangements in current literatureConveyances of right to use anothers asset to be considered prior to issuance of PV

  • TENTATIVE DECISIONS, contdMeasurement Approaches (6/2007)Lessees right-of-use asset alternatives:Intangible assetNature of the leased item (IASB prefers)Separate model (FASB prefers)Lessees liability for payments alternatives:Fair valueEffective interest method, with FVOStaff to further develop approaches

  • OTHER DISCUSSIONSLease Option Alternatives (5/2007)Right to use to exercise date + option to extendRight to use for period including extensions + option to terminateMost probable lease term approach (options not separated)Expected value of payments (options not separated)

  • OTHER DISCUSSIONS, contdRecognition Alternatives (6/2007)Upon signing of lease contractUpon delivery of leased item

  • FUTURE PLANSFASB/IASB to meet jointly in 9/2007Preliminary Views to be published in 2008

  • FOR MORE INFORMATIONSee Project Update on FASBs website at:http://72.3.243.42/project/leases.shtml

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