New lease accounting update – 4-11-13

Yesterday FASB voted to release the revised draft of lease accounting rules. The draft is expected in May with comments due by September.

Summary from the JofA article mentioned at the end of this post:

The lease proposal, which is scheduled to be released for public comment by FASB in May, would put all leases on the balance sheet. It would require a dual expense-recognition approach for lessees (excluding short-term leases), depending on whether significant consumption occurs during the lease period.

I’ll try to summarize the proposal in one sentence. All leases will be brought onto the balance sheet, with different expense recognition for items that get used up (such as equipment) and items that don’t get used up and perhaps appreciate over time (such as real estate).

Journal of Accountancy has good summary of the rule – FASB lease proposal moves forward despite dissenting views.

Compliance Week article has background on the opinions of different board members – Split FASB Proceeds With Complicated Lease Standard.

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