Articles

October 10, 2013

Lease Accounting Project Faces an Uncertain Future

As we have discussed, the Financial Accounting Standard Board "FASB" is proposing to modify the leasing standards which would result in companies recording on their balance sheet the assets and liabilities associated with most leases. The only exception would be for operating leases that are 12 months or less. The FASB has issued an exposure draft to the public and is expecting to have a round table discussion on the exposure draft in the upcoming months. However, in late August, the FASB's Investor Advisory Committee declined to support the leasing proposal, stating that the proposal is not an improvement to current accounting. Additionally, the Equipment Leasing and Finance Association are campaigning against this proposal.
This added pressure may influence the FASB decision with respect to capitalizing leases. As of this moment the FASB view is to go ahead with the proposed leasing standards. If anything new develops with respect to the FASB leasing standards we will let you know.