NEWS RELEASE 06/13/12
IASB and FASB Agree on Lease Accounting Approach
London and
Norwalk, CT, June 13, 2012—The International Accounting Standards Board
(IASB) and the Financial Accounting Standards Board (FASB) today agreed on an
approach for accounting for lease expenses as part of a project to revise lease
accounting in International Financial Reporting Standards (IFRS) and the U.S.
Generally Accepted Accounting Principles (U.S. GAAP).
The Boards
undertook the leases project to address the widespread concern that many lease
obligations currently are not recorded on the balance sheet and that the current
accounting for lease transactions does not represent the economics of all lease
transactions. Decisions on the leasing project reached to date are preliminary.
The Boards plan to release a joint Exposure Draft in the fourth quarter of this
year.
The Boards previously agreed that leases should be recorded on the
balance sheet, but have continued to discuss the classification and pattern of
expenses in the income statement. In the decision reached today, the Boards
decided upon an approach in which some lease contracts would be accounted for
using an approach similar to that proposed in the 2010 leases Exposure Draft and
some leases would be accounted for using an approach that results in a
straight-line lease expense.
"The Boards carefully considered the diverse
views of stakeholders about whether the income statement profile of all leases
should be the same. On balance, we decided that leases that convey a relatively
small percentage of the life or value of the leased asset should be recognized,
evenly over the lease term," said FASB Chairman Leslie F. Seidman.
Hans
Hoogervorst, chairman of the IASB commented: "The Boards have reached agreement
on a proposed approach to put leases over one year on the balance sheet. We will
publish our proposals for public comment, with a view to completing this
important convergence project during 2013."
Press enquiries:
Mark Byatt, Director of Communications,
IFRS Foundation
Telephone: +44 (0)20 7246 6472
Email: mbyatt@ifrs.org
John C. Pappas
Senior Manager of Communications,
Financial
Accounting Foundation
Telephone: (203) 956-3440
Email: jcpappas@f-a-f.org
Notes to editors
About the
IASB
The IASB was established in 2001 and is the
standard-setting body of the IFRS Foundation, an independent, private sector,
not-for-profit organisation. The IASB is committed to developing, in the public
interest, a single set of high quality global accounting standards that provide
high quality transparent and comparable information in general purpose financial
statements. In pursuit of this objective the IASB conducts extensive public
consultations and seeks the co-operation of international and national bodies
around the world. The IASB has 15 full-time members drawn from 11 countries and
a variety of professional backgrounds. By 2012 the Board will be expanded to 16
members. Board members are appointed by and accountable to the Trustees of the
IFRS Foundation, who are required to select the best available combination of
technical expertise and diversity of international business and market
experience. In their work the Trustees are accountable to a Monitoring Board of
public authorities. For more information visit www.ifrs.org.
About
the FASB
Since 1973, the Financial Accounting Standards
Board has been the designated organization in the private sector for
establishing standards of financial accounting and reporting. Those standards
govern the preparation of financial reports and are officially recognized as
authoritative by the Securities and Exchange Commission and the American
Institute of Certified Public Accountants. Such standards are essential to the
efficient functioning of the economy because investors, creditors, auditors, and
others rely on credible, transparent, and comparable financial information. For
more information about the FASB, visit our website at www.fasb.org.