IASB Issues Results of Outreach Meetings on the Proposed Accounting by Lessees

Outreach meetings with the analysts and investors were held on the proposed accounting treatment by lessees. The meeting were held between May and September of the current year. The staff of International Accounting Standards Board (IASB) has issued the results of these outreach meetings. The summary of the feedback of the analysts and investors has been published.

Three major questions were asked by the IASB and Financial Accounting Standards Board (FASB) during these outreach meetings. The questions were:

· Are assets and liabilities created for a lessee by a lease and , if so, should the lessee recognize them in its Balance Sheet?

· What are your views about the proposed changes in the income statement of the lessee?

· What are your views about the proposed disclosures?

On the first question, the analysts and credit analysts who participated in the meetings usually supported the proposed changes in the lessee's balance sheet. The views of equity analysts were mixed regarding this question.

On the second question, majority of the analysts and investors supported the proposed changes and understood the rationale behind the proposed dual approach. They agreed that there were economic differences between leases of equipment & vehicle and leases of real estate, therefore, proposed dual approach is justifiable.

Majority of the analysts and investors who were supporters of balance sheet approach but disagreed with the proposed dual approach in the income statement, still supported the overall project. They expressed their willingness to accept the proposed changes in the income statement for the achievement of improvements in the financial reporting.

On the third question, only some of the participants expressed their views. Not all of the analysts and investors who were consulted expressed their views about the disclosure proposal. The participants who expressed their views, usually supported the proposed changes. Some of the analysts and investors said that instead of changing the recognition and measurement of leases, only the note disclosures should be improved.