Leases
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.
Latest developments
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:
- dual model for lessees and lessors;
- higher threshold for including extension options when measuring lease assets and liabilities;
- simplified treatment of many types of variable lease payments; and
- new guidance on applying the concepts of "specified asset" and "control" when determining whether a contract contains a lease.
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).
What's next
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.
Dataline
Leases -- One size does not fit all: A summary of the boards' redeliberations
9/17/12 | Assurance servicesIn brief
In brief: FASB and IASB publish revised exposure draft on leases (No. 2013-26)5/16/13 | Assurance services
The FASB and IASB issued a revised exposure draft on leases on May 16, 2013 with a comment period ending September 13, 2013. Almost all entities will be impacted. This In brief article provides an overview of the revised proposal.
Webcast
Leasing webcast: Impacts and Action Items – June 11, 2013Addressing the proposed changes to lease accounting will be a challenge for most companies. This webcast will discuss how management can prepare for the changes in a measured way and some of the actions that companies are taking now to prepare.
Webcast
Leasing webcast: Overview of the Proposed Guidance – May 29, 2013Almost three years have passed since the IASB and FASB (the "Boards") issued their initial proposal. After extensive outreach and re-deliberation, the Boards will be issuing a new proposal. This webcast will discuss an overview of the proposed guidance and the nuances that might lead to unexpected financial results.
In brief
In brief: Lease accounting proposal expected by mid-May 2013; alternative views expressed (No. 2013-19)4/11/13 | Assurance services
The FASB met on April 10, 2013 to discuss the costs, benefits, and complexity associated with the proposed lease accounting rules. The FASB members expressed their individual points of view and voted 4 to 3 in favor of moving forward with the revised exposure draft. The FASB and IASB expect to issue a joint exposure draft in mid-May 2013. This In brief article provides an overview of the decisions reached at the FASB meeting.
Setting the standard
Setting the standard -- What you need to know about the FASB's and IASB's standard setting activities -- March 20133/25/13 | Assurance services
Our Q1-2013 edition provides updates on the latest developments in revenue recognition, classification and measurement of financial instruments, impairment of financial assets, leases, insurance contracts, and more.
Quarter close
The quarter close — First quarter 2013: Publication and new video perspectives3/18/13 | Assurance services
This edition of The quarter close highlights current developments in financial reporting, including key standard-setting developments in revenue, financial instruments, and other hot topics, as well as SEC and PCAOB regulatory updates.
Setting the standard
Setting the standard -- What you need to know about the FASB's and IASB's standard setting activities -- December 201212/19/12 | Assurance services
There is no shortage of activity to report this quarter as the boards forged ahead on their major convergence projects. The FASB and IASB made several key decisions as they move closer toward issuing exposure drafts and final standards. In the Q4-2012 edition of Setting the standard, we update you on the latest developments of the joint standard setting projects of the FASB and IASB, as well as the latest on FASB-only projects.
Quarter close
The quarter close — Fourth quarter 2012: Publication and new video perspectives12/12/12 | Assurance services
This edition of The quarter close has the latest updates and timely reminders to help you navigate your year-end reporting process with a number of hot topics, including fair value, asset impairments, pensions, valuation allowances, and more.
Dataline
Dataline: Accounting and disclosure implications of Hurricane Sandy (No. 2012-17)11/12/12 | Assurance services
Hurricane Sandy is expected to be the second-costliest Atlantic hurricane in history, only surpassed by Hurricane Katrina in 2005. Many businesses were disrupted by Hurricane Sandy and its aftermath including the New York Stock Exchange, which was closed for two days. While not all-inclusive, this Dataline discusses several accounting and disclosure-related matters companies may encounter in dealing with the financial reporting implications of Hurricane Sandy.
Quarter close
The quarter close — Third quarter 2012: Publication and new video perspectives now available9/17/12 | Assurance services
This edition of The quarter close highlights the SEC report on IFRS, the latest on conflict minerals, health care reform, and several FASB releases that are sure to keep you busy this fall. Video perspectives are also now available.
Dataline
Dataline: Leases -- One size does not fit all: A summary of the boards' redeliberations (No. 2012-11)9/17/12 | Assurance services
The FASB and IASB jointly issued the initial leases exposure draft in August 2010 (the "initial ED"). A majority of the over 800 comment letters received raised significant concerns about the proposals. Redeliberations began in January 2011 and were substantially completed in July 2012. A "revised ED" is planned for the end of November 2012 (although this may slip into early 2013), with a 120-day comment period. This Dataline looks at both the lessee and lessor proposed accounting models that will be included in the revised ED.
In brief
In brief: Lease accounting redeliberations come to an end, but alternative views are on the horizon (No. 2012-26)7/19/12 | Assurance services
At their July 17 joint meeting, the FASB and IASB (the boards) completed their redeliberations of the leases project and instructed their staff to begin drafting the revised exposure draft. The boards expect to issue the revised exposure draft by the end of November 2012 with a 120-day comment period. The difficulties encountered during the 18-month-long redeliberation process were highlighted when the board members were asked whether they planned to present an alternative view to the revised proposals. Some members of each board indicated that they may present alternative views. This In brief article highlights some of their concerns.
In brief
In brief: A dual model for lease accounting: redrawing the lines (No. 2012-15)6/15/12 | Assurance services
After more than a year of deliberations, in June 2012 the FASB and IASB took a big step forward in finalizing their revised proposals for lease accounting. PwC's CFOdirect Network comments.
In brief
In brief: FASB and IASB redeliberate lessee accounting - May 2012 (No. 2012-13)5/25/12 | Assurance services
Read this commentary on the February 2012 FASB and IASB deliberations on lessee accounting, from PwC's CFOdirect Network.
Podcast
Podcast: Build to suit leaseAssurance services
The first quarter 2012 'Current Accounting and Reporting Developments' webcast on March 21, 2012 included a discussion on build to suit leases, led by Chad Soares. This segment of the webcast is now available for podcast download.
Dataline
Dataline: Leasing -- Redeliberations of the leasing project -- Some new twists (No. 2011-21)5/6/11 | Assurance services
This Dataline discusses the redeliberation decisions reached on the FASB and IASB's joint leasing project during the board meetings in January 2011 through April 2011. We also include PwC observations on the potential implications as well as examples on the application of the boards' tentative decisions.
Dataline
Dataline: Accounting and disclosure implications of the earthquake in Japan and related events (No. 2011-17)3/28/11 | Assurance services
On March 11, 2011, an earthquake struck off the northeast coast of Japan, triggering a tsunami. The power supply in certain parts of Japan has been cut-off with rolling blackouts scheduled in other areas. Further compounding the situation, nuclear power plants were damaged causing worries about the possible meltdown of nuclear reactors and the release of harmful radioactive materials. While not all-inclusive of the types of issues that may be created by these events, this Dataline discusses several accounting and disclosure-related matters companies may encounter in dealing with the financial reporting implications of these tragic events.
Dataline
Dataline: Leasing -- FASB and IASB agree on changes that will reduce complexity of the proposed leasing standard (No. 2011-11)2/23/11 | Assurance services
The comment period on the FASB and IASB's proposed accounting standard on leases ended on December 15, 2010 and the boards have begun redeliberating the exposure draft. Thus far, the boards have made tentative decisions to change the proposals in the exposure draft with respect to the definition of lease term (threshold for inclusion of extension options) and inclusion of variable or uncertain cash flows (i.e., contingent rent). The boards are also considering changes in the definition of a lease, profit and loss recognition patterns, and the lessor accounting model. This Dataline provides a summary of the overall status of the boards' redeliberations on lease accounting.
Dataline
Dataline: Leasing -- The responses are in... (No. 2011-05)1/27/11 | Assurance services
The FASB and IASB received over 770 comment letters in response to their August 17, 2010 Exposure Draft, Leases. The comment period closed on December 15, 2010. The boards have also performed direct outreach with users and preparers, and held public roundtable discussions in London, Hong Kong, Chicago and Norwalk. This Dataline summarizes the key themes from the comment letters.
Dataline
Dataline: Highlights of the 2010 AICPA National Conference on Current SEC and PCAOB Developments (No. 2010-44)12/16/10 | Assurance services
Last week's annual AICPA National Conference on Current SEC and PCAOB Developments focused on restoring public trust and investor confidence in the U.S. capital markets. Presenters called for all members of the financial reporting supply chain, including boards, management and auditors, to play a role in these efforts. This Dataline takes a closer look at the topics discussed at the conference.
PwC comment letter (FASB)
PwC Comments on Proposed ASU: Leases12/2/10 | Assurance services
PwC expressed support for the boards' objective to report relevant and representationally faithful information to users of financial statements about the amounts, timing and uncertainty of cash flows arising from leases. The firm acknowledges that the proposals address the primary concern - that is, the recognition of assets and liabilities arising out of lease contracts - however, application of the proposals might reduce the income statement usefulness to many users. The firm believes that the proposals will result in significant cost and complexity for some preparers. The firm does not believe that the current proposals fully meet the objective in a number of key areas including the measurement of more complex leases, specifically...
PwC comment letter (IASB)
PwC Comments on Exposure Draft: Leases12/2/10 | Global accounting consulting services
PwC expressed support for the boards' objective to report relevant and representationally faithful information to users of financial statements about the amounts, timing and uncertainty of cash flows arising from leases. The firm acknowledges that the proposals address the primary concern - that is, the recognition of assets and liabilities arising out of lease contracts - however, application of the proposals might reduce the income statement usefulness to many users. The firm believes that the proposals will result in significant cost and complexity for some preparers. The firm does not believe that the current proposals fully meet the objective in a number of key areas including the measurement of more complex leases, specifically...
Dataline
Dataline: A New Approach to Lease Accounting -- Proposed Rules Would Have Far Reaching Implications (No. 2010-38)9/16/10 | Assurance services
The FASB and IASB's recently-issued exposure draft titled Leases contains the boards' proposal for a new approach to lease accounting that could fundamentally change the way both lessees and lessors account for leases. Under the proposed model, a lessee's rights and obligations under all leasesùexisting and newùwould be recognized on its balance sheet. Lessors would report leases using either a performance-obligation approach or a derecognition approach. This Dataline provides an overview and various insights into the boards' proposed standard. The Dataline also includes both lessee and lessor examples of how to apply the proposed standard. ...