Upholding the Revise of Lease Accounting Plans by IASB and FASB
Lease accounting has been planned by the IFRS to be revised but lately the whole planning action was stooped due to the strong resistance from the business and the other practitioners thereby criticizing the plan which had forced them to account for the leases yearly.
It was both the boards of International Accounting Standards Board (IASB) and the Financial Accounting Standards Board (FASB) that had decided to bring up those drafting proposals such that a twin track system could be launched that accounts for the leases under the new revision of IAS 17. Therefore this had enhanced their controversy over the prospect of bringing all the leases on one balance sheet.
Thus this dual approach will enable those lease contracts to reach that is related to 2010 Leases of releasing the details while the remaining would be going for an expense of straight line lease. But the senior members of financial accounting advisory services confirm that the clients will definitely be accepting the dual approach in the income statement about the recognition of expenses.
But the profile of the front loaded expense that would be enrolled in the income statement of the original ED model, the result of the interest expense is related to the lease liability, recorded on the balance sheet.
But it is adding to the complexity of this approach and also the judgment of the proposal that also include impact’s on the company’s KPI which would definitely reflect the reality in the profile of the leased assets and their use.
Though much of the lease obligations would not be accounted into the balance sheet and current accounting of lease transactions, but still this would definitely not be able to represent the economics including the details of the lease transactions.
Thus now the board has decided to release a joint exposure draft in the last quarter of the year that would certainly be a review of IFRS in 2013.
Therefore the higher authorities of IFRS have decided to go for a public review after which the lease plan can be brought into action.