FASB/IASB Joint Project: Lease Accounting

The Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB) (collectively, the Boards) are jointly working on a project to develop common lease accounting requirements to ensure that the assets and liabilities arising from lease contracts are recognized in the balance sheet. In August 2010, the FASB issued a proposed Accounting Standards Update, Leases (Topic 840), regarding the financial reporting of lease contracts. The comment letter period for this Exposure Draft (ED) closed in December 2010 and, given the concerns raised in the comment letter process and other outreach activities conducted by the Boards, redeliberations of various provisions of the ED continue. While the overall premise that leases should be recognized in the balance sheet has not been changed by the Boards in their redeliberations, certain aspects of lease accounting have changed or may change as a result of further redeliberations. As such, the final guidance is expected to have significant differences from the August 2010 ED.

Recent Activities

FASB and IASB convergence projects at-a-glance
A high-level overview of four convergence projects currently being worked on by the FASB and IASB as of August 1, 2012. These projects will bring significant changes to the accounting for leases, financial instruments, revenue recognition and consolidation.

Compromise reached in joint lease project
On June 13, 2012, the FASB and IASB reached agreement on an expense recognition and classification approach for the project.

Summary of decisions reached by the Boards
The FASB’s summary of the decisions reached and actions taken by the Boards during their redeliberations of the decisions included in the ED.