A perspective on the joint IASB/FASB exposure draft on accounting for leases

Yuri Biondi, Robert J. Bloomfield, Jonathan C. Glover, Karim Jamal, James A. Ohlson, Stephen H. Penman, Eiko Tsujiyama, T. Jeffrey Wilks

Research output: Contribution to journalArticle

11 Citations (Scopus)

Abstract

The International Accounting Standards Board (IASB) and the Financial Accounting Standards Board (FASB) recently issued a joint exposure draft on accounting for leases. This exposure draft seeks to shift lease accounting from an "ownership" model to a "right-of-use" model. Under the current ownership model, leases can be reported on balance sheet (finance leases) if certain tests are met, or off balance sheet (operating leases) if those tests are not met. The new model seeks to report all leases on the balance sheet based on the present value of lease obligations without any bright line tests, and no sharp on or off the balance sheet classifications. We are sympathetic to the standard setters' concern that the current lease standard is being manipulated improperly by managers, resulting in large amounts of debt being reported off balance sheet. We provide a discussion of current lease accounting and the proposed exposure draft. We also comment on five key issues covered by the exposure draft: the definition of a lease, the initial measurement and eventual reassessment at fair values, the accounting for lessors, the impact of lease accounting on recognition and income measurement, and classification of lease accounting elements and their impact on accounting ratios.

Original languageEnglish
Pages (from-to)861-871
Number of pages11
JournalAccounting Horizons
Volume25
Issue number4
DOIs
Publication statusPublished - 2011 Dec
Externally publishedYes

Fingerprint

Financial accounting standards
International Accounting Standards Board
Draft
Lease
Balance sheet
Ownership
Obligation
Managers
Present value
Fair value
Operating leases
Finance
Income
Debt

Keywords

  • Accounting standards
  • FASB
  • Financial reporting
  • IASB
  • Leases

ASJC Scopus subject areas

  • Accounting

Cite this

Biondi, Y., Bloomfield, R. J., Glover, J. C., Jamal, K., Ohlson, J. A., Penman, S. H., ... Jeffrey Wilks, T. (2011). A perspective on the joint IASB/FASB exposure draft on accounting for leases. Accounting Horizons, 25(4), 861-871. https://doi.org/10.2308/acch-50048

A perspective on the joint IASB/FASB exposure draft on accounting for leases. / Biondi, Yuri; Bloomfield, Robert J.; Glover, Jonathan C.; Jamal, Karim; Ohlson, James A.; Penman, Stephen H.; Tsujiyama, Eiko; Jeffrey Wilks, T.

In: Accounting Horizons, Vol. 25, No. 4, 12.2011, p. 861-871.

Research output: Contribution to journalArticle

Biondi, Y, Bloomfield, RJ, Glover, JC, Jamal, K, Ohlson, JA, Penman, SH, Tsujiyama, E & Jeffrey Wilks, T 2011, 'A perspective on the joint IASB/FASB exposure draft on accounting for leases', Accounting Horizons, vol. 25, no. 4, pp. 861-871. https://doi.org/10.2308/acch-50048
Biondi Y, Bloomfield RJ, Glover JC, Jamal K, Ohlson JA, Penman SH et al. A perspective on the joint IASB/FASB exposure draft on accounting for leases. Accounting Horizons. 2011 Dec;25(4):861-871. https://doi.org/10.2308/acch-50048
Biondi, Yuri ; Bloomfield, Robert J. ; Glover, Jonathan C. ; Jamal, Karim ; Ohlson, James A. ; Penman, Stephen H. ; Tsujiyama, Eiko ; Jeffrey Wilks, T. / A perspective on the joint IASB/FASB exposure draft on accounting for leases. In: Accounting Horizons. 2011 ; Vol. 25, No. 4. pp. 861-871.
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