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.
Most of the four FASB members who voted in favor of the proposal acknowledged that a single lease accounting model would be simpler than the dual income statement recognition approach proposed. However, they recognized the feedback from constituents that a single model would not reflect the different economics of lease transactions.
Additional support included views that:
Leslie Seidman, FASB chairperson, supported the proposal but expressed concern with the dividing line for classifying a lease as a Type 1 (front-loaded recognition) or Type 2 (straight-line recognition) lease. She plans to suggest an alternative view of where the line should be drawn in the basis for conclusions.
Three FASB members expressed their concerns with the proposal and stated that they will present alternative views as part of the revised exposure draft. They believe the revised proposal is complex and does not meet the needs of financial statement users.
Specific comments included:
The FASB and IASB have been working jointly to achieve a converged lease accounting standard. They expect to issue a joint revised exposure draft in mid-May 2013 with a 120-day comment period. The FASB has indicated it will perform extensive outreach during the comment period.
PwC clients who have questions about this In brief should contact their engagement partner. Engagement teams that have questions should contact the Leasing team in the National Professional Services Group (1-973-236-7805).