Accounting

FASB, IASB Decide on Disclosure Package for Planned Leasing Rules

By Steve BurkholderAccounting rulemakers plan to require that a set of key numbers that shed light on companies' leasing activities, including various lease expenses, be presented in the financial statements.Beyond that, Financial Accounting Standards Board and the International Accounting Standards Board, meeting jointly Jan. 21, would suggest, but not require, an investor-friendly tabular format for the presentation of those quantitative disclosures.In a four-hour meeting, FASB and IASB worked through details of a score or more of proposed disclosure items—both quantitative and qualitative—about leases before agreeing on their respective packages for footnote reporting.The panels' sets of disclosure prescriptions are keyed to the boards' different, nearly completed final rules on leases. The boards are generally aligned on balance sheet treatments of leases.FASB proposes essentially a continuation of the U.S. generally accepted accounting principles' classification of leases—as either “Type A” leases, to be treated as financings, with interest and amortization expense recorded separately in the income statement; or “Type B” leases, which would undergo straight-line expensing.IASB settled on a single model for leases. All leases would be treated as financings, similar to those dubbed “Type A” by FASB.The leases disclosure regime on which FASB plans would be applied by both public and private companies, the U.S. board decided Jan. 21.Reconciliations Disclosure Out On another notable leases disclosure topic, the boards decided to cut a requirement proposed in 2013 to have a company disclose reconciliations of its opening and closing balances of lease liabilities. Companies, citing high implementation costs for such financial reporting, voiced their displeasure with that planned disclosure.IASB also voted to eliminate a proposed footnote reporting provision on a similar reconciliation of right-of-use assets stemming from lease agreements, together with the reconciliations for lease liabilitiesThat added prescription for “ROU assets” reflects the single model for leases accounting on which the London-based board's leases standard would be built.Final Rules Out This Year? The leases project—high-priority standard setting that could have significant impact in commercial sectors such as banking, airlines, shipping, and equipment leasing—is expected to be mostly...

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