Leases

The Board’s long term lease accounting project is expected to result in a fundamental change in accounting for leases. The project will cover leases of real estate as well as equipment leases.

The primary objective of the project is to develop a new model for the recognition of assets and liabilities arising under lease contracts.

At the Board meeting in July 2008, the Board decided to focus on lessee accounting and defer the development of a new accounting model for lessors. The Board also decided on an overall approach that would apply the existing finance lease model, adapted where necessary, to all leases. 

Is this project part of the Memorandum of Understanding?

Yes. Under the Memorandum of Understanding (MoU), the IASB and FASB agreed to consider and make a decision about the scope and timing of a potential lease accounting project by 2008.

This goal was achieved when the IASB and FASB added the project to their respective agendas on 19 July 2006.

At a joint meeting in April 2008, the two Boards discussed updating the MoU and instructed the staff to develop a technical plan for the lease accounting project that would result in the publication of a new standard by mid-2011 at the latest.

The MoU sets out a Roadmap for Convergence between IFRSs and US GAAP. Click here for more information on the MoU.

Click here for more information on the MoU.

Next due process step

 The staff are working towards a discussion paper to be issued jointly by the IASB and FASB, in the fourth quarter of 2008.  

Due process steps completed

Stage 1: Setting the agenda

The lease accounting project was added to the agenda of the IASB in July 2006.

Stage 2: Project planning

This project is a joint project with the FASB.

Leasing is a major international industry, and a very important source of finance for a wide range of entities. Consequently, the IASB believes that it is important to seek the views of both users and preparers of financial statements as the project progresses. The IASB and FASB have therefore established a joint working group for this project. The first working group meeting was held in February 2007

Click here for more information on the joint working group.

Stage 3: Development and publication of a discussion paper

The staff are working towards a discussion paper to be issued jointly by the IASB and FASB, in the fourth quarter of 2008. The discussion paper will include the preliminary views of both Boards.

Estimated project completion

Following publication of the discussion paper, the Boards will move towards publication of an exposure draft on lease accounting. This exposure draft will take into account comments received from constituents on the discussion paper.

The staff expect a final standard on lease accounting to be published in the second quarter of 2011.

Further information

• Click here for the joint IASB-FASB project summary that provides more information about those decisions (hosted on the FASB website).