FASB, IASB Tentatively Decide To Revise Lease Accounting Proposals

(February 2011) At a recent joint meeting, the Financial Accounting Standards Board and International Standards Board tentatively decided to revise some of their more significant lease accounting proposals to address concerns.

The tentative decisions would reduce the optional periods to be included in the lease term, reduce the amount of variable lease payments to be included in the lessee’s lease liability and lessor’s lease receivable, clarify the accounting for termination penalties and residual value guarantees, and establish a lease classification test that would be used to determine the pattern of profit and loss recognition in the income statement by lessees and lessors.

The boards formed the tentative decisions after considering feedback from constituents obtained in nearly 800 comment letters, seven roundtable discussions, preparer workshops, working group meetings and other outreach activities.

Read details about the decision and which provisions would be changed in this edition of KPMG’s Defining Issues.