The FASB and IASB jointly issued the initial leases exposure draft in August 2010 (the "initial ED"). A majority of the 800+ comment letters raised significant concerns about the proposal. Redeliberations began in January 2011 and were substantially completed in September 2012. A "revised ED" is planned for the first half of 2013, with a 120-day comment period. Three FASB board members and two of the IASB board members stated they may present alternative views in the revised ED.
The revised ED will retain the previously proposed "right of use" concept, and lessees would reflect all leases (except certain short term leases) on the balance sheet. Some lessors will derecognize the underlying leased asset, but others will continue to include it on the balance sheet. The revised ED will also propose a number of other changes to existing recognition, measurement, presentation, and disclosure guidance.
The most significant changes to the initial ED will include:
The revised ED will allow entities to apply a full retrospective approach or to elect certain reliefs to reduce the transition burden. Preparers will need to apply the guidance to all leases existing as of the beginning of the earliest comparative period presented (i.e., no grandfathering).
Issuance of a final standard is expected during the first half of 2013. The effective date has yet to be discussed, but will likely not be before 2016.