Project Update

Leases—Joint Project of the IASB and FASB

Last Updated:  December 6, 2013


Return to Leases Project Update Main Page

*BACKGROUND INFORMATION

Outreach on Exposure Draft (2010)

Webcast

On Thursday July 19, 2012, the staff of the IASB and the FASB held a joint webcast to provide an update on the lessee and lessor accounting proposals, focusing on the decisions reached at the joint Board meeting in June 2012. Click here for a recording of the webcast presentation. A podcast recording of the Question and Answer session is available here.

Joint Working Group Meetings

The Boards held joint leases working group meetings following the issuance of the 2010 ED as follows:

  • Tuesday, January 24, 2012, in both Norwalk, CT, and London
  • Monday, April 11, 2011, in London
  • Friday, January 7, 2011, in Norwalk, CT.

Public Roundtable Meetings

The Boards held public roundtable meetings in December 2010 and January 2011 to discuss their August 2010 Exposure Draft on Leases. The Boards’ purpose in holding those meetings was to engage in a constructive dialogue about the Exposure Draft with a wide variety of stakeholders. To ensure the Boards received broad-based input, meeting participants represented a variety of perspectives, including those of preparers, auditors, investors, and other users of financial statements.

The public roundtable meeting dates were as follows:

  • Friday, December 17, 2010, in London
  • Monday, December 20, 2010, in Hong Kong
  • Wednesday, January 5, 2011, in Chicago, Illinois
  • Thursday, January 6, 2011, in Norwalk, Connecticut

Workshops

Representatives and staff members from each Board attended 15 preparer workshop meetings with over 90 participants in the following countries:

  • November 22, 2010, in Brazil (two sessions)
  • November 22, 2010, in Toronto (one session)
  • November 24 and 25, 2010, in London (three sessions)
  • November 29 and 30, 2010, in Norwalk, CT (four sessions)
  • December 2, 2010, in Seoul (one session)
  • December 3, 2010, in Tokyo (two sessions)
  • December 7, 2010, in Melbourne (two sessions)

Preparer Questionnaire

On September 2, 2010, the Boards published a questionnaire for lessees and lessors as part of their outreach on the Leases project.

In the questionnaire, the Boards are surveying organizations on their use of, and accounting for, leases. Completing the questionnaire does not require knowledge of the Boards' proposals. More details.

Investor Questionnaire

On September 14, 2010, the FASB published a questionnaire for investors and analysts as part of its outreach on the Leases project.

In the questionnaire, the Board asks how the proposed new leases guidance might affect financial statement users’ analysis. More details.

Exposure Draft (2010)

On August 17, 2010, the Boards published, for public comment, an Exposure Draft, Leases. The comment period for the Exposure Draft ended on December 15, 2010.

Discussion Paper

On March 19, 2009, the Boards published, for public comment, a Discussion Paper, Leases: Preliminary Views. The comment period for the Discussion Paper ended on July 17, 2009.

Memorandum of Understanding (MoU)

In February 2006, the IASB and the FASB issued an MoU that described a joint work plan to expedite global convergence in accounting standards and that established a series of milestones to be reached by 2008. The leases project is part of the 2006 MoU. Under the 2006 MoU, the IASB and the FASB would have to consider and make a decision about the scope and timing of a potential leasing project by 2008. This goal was achieved when the IASB and the FASB added the leasing project to their respective agendas on July 19, 2006.

The Boards recently updated the 2006 MoU at the April 2008 joint meeting. As part of the updated MoU, the leases project’s estimated completion date is 2011.

History of the Leases Project

FASB Statement No. 13, Accounting for Leases, issued in 1976, provides guidance on accounting for leases for both lessors and lessees. According to the provisions of Statement 13, a lessee should recognize both an asset and a liability for a lease that transfers substantially all benefits and risks incident to the ownership of property, and a lessor should recognize such a lease as a sale or financing. Under Statement 13, a lease that does not transfer substantially all benefits and risks incident to the ownership of property is classified as an operating lease by the lessee. Under operating lease classification, the lessee does not recognize any elements of the lease on its balance sheet (that is, it does not recognize an asset for the right to use the leased item or a related liability for the future lease payments); rather, the lessee recognizes rental expense as it becomes payable.

IAS 17, Leases, was issued by the IASC in 1982 and was very similar to Statement 13 as it was based on the extent to which risks and rewards incident to ownership of a leased asset lie with the lessor or the lessee. Although IAS 17 has been amended several times, its most recent version retains the fundamental approach to the accounting for leases contained in the original standard.

Following the issuance of Statement 13 and IAS 17, the FASB, IASB, Emerging Issues Task Force (EITF), Standing Interpretations Committee (SIC), International Financial Reporting Interpretations Committee (IFRIC), Securities and Exchange Commission (SEC), and American Institute of Certified Public Accounting (AICPA) issued numerous pieces of guidance addressing various issues relating to the application of Statement 13 and IAS 17. Some believe that the additional guidance adds to the complexity of existing guidance in this area.

The Boards considered adding a lease accounting project to their agendas in response to the criticisms of many of their constituents, including the FASB’s Financial Accounting Standards Advisory Council (FASAC), the FASB’s User’s Advisory Council (UAC), and the SEC’s 2005 Report and Recommendations Pursuant to Section 401(c) of the Sarbanes-Oxley Act of 2002 On Arrangements with Off-Balance Sheet Implications, Special Purpose Entities, and Transparency of Filings by Issuers (Off-Balance Sheet Report). Many of those constituents indicated that current lease accounting standards fail to provide complete, transparent information and urged the Boards to undertake a lease accounting project. Also, in June 2004, the IASB and the FASB agreed that accounting for leases was in need of a fresh look and that any resulting improvements should be made through a major project conducted jointly when resources permitted.

Standard-setting activity during the past 20 years has not been limited to merely interpreting the leasing approach in Statement 13 and IAS 17. For example, a group of international standards setters (including FASB representatives), referred to as “the G4+1,” undertook an effort to reconsider the accounting for leases based on the existing conceptual framework. Their efforts resulted in the issuance of two Special Reports issued in 1996 and 1999, respectively: Accounting for Leases: A New Approach and Leases: Implementation of a New Approach. These reports describe a proposed conceptual approach to lease accounting focusing on the fundamental components of lease transactions.

The issues relating to lease accounting that need to be addressed are much the same as those previously considered in the G4+1 Special Reports. However, the objective is to analyze these issues in terms that are consistent with current projects, particularly those on revenue recognition, nonfinancial liabilities, derecognition, and the conceptual framework. In July 2006, the FASB and the IASB decided to add a joint leasing project to their respective agendas because of their concern that the current accounting in this area does not clearly portray the resources and obligations arising from lease transactions.

Working Group

During the third quarter of 2006, the Boards sent out an invitation for nominations to join the joint international working group planned for this project (invitation for nominations). In the fourth quarter of 2006, the Boards announced the members of the working group (announcement of working group members).

The following table provides links to the IASB website for the leases working group meetings. The first column provides the date and location of the working group meeting with a link to the full meeting agenda, agenda papers, and the audio webcast of the meeting. The second column provides a link to the summary report of the working group meeting.

Date/Location/Materials

Summary Report

January 24, 2012—Norwalk/London

Summary Report January 24, 2012

April 11, 2011—London

Summary Report April 11, 2011

January 2011—Norwalk

Summary Report January 7, 2011

September 2009—London

Summary Report September 3, 2009

October 2008—Norwalk

Summary Report October 7, 2008

February 2007— London

Summary Report February 15, 2007

BOARD/OTHER PUBLIC MEETING DATES (Prior To The ISSUANCE OF THE 2013 EXPOSURE DRAFT)

The IASB meeting summaries and FASB meeting minutes are provided for the information and convenience of constituents who want to follow the Boards’ deliberations. All of the conclusions reported are tentative and may be changed at future Board meetings. Decisions become final only after a formal written ballot to issue a final Accounting Standards Update.

(Please see Board/Other Public Meeting Dates page for meetings after the issuance of the 2013 Exposure Draft.
)

Topic

IASB Meeting Summaries and Observer Notes

FASB Board Minutes

FASB Board Meeting
Cost/benefit and complexity
N/A April 10, 2013  
Joint IASB/FASB Board Meeting
Transition for existing finance/capital leases, transition for leveraged leases (FASB-only)
February 20, 2013 February 20, 2013 
FASB Board Meeting
Internal-use software
N/A February 12, 2013 
Joint IASB/FASB Board Meeting
Identification of lease components and the classification of leases
January 30, 2013 January 30, 2013 
FASB Board Meeting
Nonpublic entity issues relating to the lessee’s incremental borrowing rate, lessee disclosures, and related party leases
N/A September 25, 2012
Joint IASB/FASB Board Meeting
Sale and leaseback transactions, issues regarding how a lessee would account for leases under the single lease expense approach, and issues regarding the determination of which lease approach should be applied
September 20, 2012 September 20, 2012
Joint IASB/FASB Board Meeting
Lessee statement of financial position and cash flow presentation, lessee interim and annual disclosure requirements, lessee measurement of the ROU asset transition, lessor measurement of the underlying asset when a lease terminates prematurely, and comment period and balloting discussion
July 17, 2012 July 17, 2012
Joint IASB/FASB Board Meeting
Lessee accounting model, whether there should be different lease expense recognition patterns for different lease contracts, and whether any change should be made to lessor accounting as a consequence of the lessee accounting decisions
June 13, 2012 June 13, 2012
Joint IASB/FASB Board Meeting
Feedback received during leases outreach meetings held in April and May 2012
May 24, 2012 May 24, 2012 
Joint IASB/FASB Board Meeting
Leases working group meeting summary, lessee accounting – introduction and overview, lessee accounting – illustrations, lessee accounting approaches, leases excluded from the scope of the receivable and residual approach, consequences of lessee accounting discussion and lessor property decision
February 28-29, 2012  February 28-29, 2012 
Joint IASB/FASB Board Meeting (via videoconference)—
Cancellable leases, revenue recognition for lessors with leases of investment property, and disclosure requirements for lessors with leases of investment property
December 14, 2011 December 14, 2011 
Joint IASB/FASB Board Meeting (via videoconference
Consequential amendments and additional transition considerations for business combinations, borrowing costs, and secured borrowings
November 16, 2011 November 16, 2011 
Joint IASB/FASB Board Meeting (via videoconference)
Lessor disclosures, and additional transition considerations, including for sale and leaseback transactions
November 1, 2011 November 1, 2011 
Joint IASB/FASB Board Meeting (via videoconference)
Lessor accounting, subsequent measurement of the residual asset, transfer of the lease receivable, lessor presentation, transition
October 19-20, 2011 October 19, 2011 
Joint IASB/FASB Board Meeting (via videoconference)
Lessor subsequent measurement under the ‘receivable and residual approach’, a scope issue, accounting for residual value guarantees by the lessor, and lessor presentation
September 19-21, 2011 September 19, 2011

September 21, 2011
Joint IASB/FASB Board Meeting
Reexposure, lessor accounting, variable payments that depend on an index or rate, embedded derivatives, and lessee presentation and disclosure
July 20-21, 2011 July 20, 2011

July 21, 2011
FASB Board Meeting
Leveraged lease accounting
N/A July 13, 2011 
Joint IASB/FASB Board Meeting
Lessor accounting, subleases, short-term leases
June 2011 June 13 & 14, 2011

June 15, 2011
Joint IASB/FASB Board Meeting
Lessee accounting: subsequent measurement issues, residual value guarantees-lessees
June 1, 2011 June 1, 2011 
Joint IASB/FASB Board Meeting
Lessee accounting, lessor accounting, contract modification, reassessment of options and discount rate
May 17-19, 2011 May 17-19, 2011 
Joint IASB/FASB Board Meeting
Variable lease payments, definition of a lease, accounting approaches
April 12-13, 2011 April 12, 2011

April 13, 2011
Joint IASB/FASB Board Meeting
Inception vs. commencement, initial direct costs, determination of the discount rate in a lease, contracts that contain a lease, sale and leaseback
March 21-22, 2011 March 21, 2011

March 22, 2011
Joint IASB/FASB Board Meeting
Distinguishing between a lease and a purchase or a sale, accounting for purchase options, short-term leases
March 14-15, 2011 March 14, 2011

March 15, 2011
Joint IASB/FASB Board Meeting
Confirmation of the right-of-use model, scope and scope exclusions
March 2, 2011 March 2, 2011  
IASB/FASB Board Meeting
—Accounting for variable lease payments, accounting for options to extend or terminate a lease, principles relating to the definition of a lease, types of leases— the case for other-than-finance leases, other lease payment considerations
February 15-18, 2011 February 16, 2011

February 17, 2011 Session 1

February 17, 2011 Session 2
Joint IASB/FASB Board Meeting—Examples to distinguish a service from a lease February 2011 February 1, 2011
Joint IASB/FASB Board Meeting—Lessor accounting January 2011 January 20, 2011
Joint IASB/FASB Board Meeting—Comment letter analysis, definition of a Lease January 2011 January 19, 2011

Board/Other Public Meeting Dates (prior to the issuance of the 2010 Exposure Draft)

The IASB meeting summaries and FASB meeting minutes are provided for the information and convenience of constituents who want to follow the Boards’ deliberations. All of the conclusions reported are tentative and may be changed at future Board meetings. Decisions become final only after a formal written ballot to issue a final standard.


Topic

IASB Meeting Summaries and Observer Notes

FASB Board Minutes

Joint IASB/FASB Board Meeting—Sale and Leaseback, FASB Proposed Wording for Lessor Accounting Approach, Revised Proposed Wording for Lessor Accounting Approach July 2010 July 22, 2010  
FASB Board Meeting—FASB Proposed Wording for Lessor Accounting Approach, Revised Proposed Wording for Lessor Accounting Approach   July 22, 2010 
Joint IASB/FASB Board Meeting—Hybrid Approach: Proposed Wording for the Split July 2010 July 21, 2010 
Joint IASB/FASB Board Meeting—Application Guidance on When to Use the Performance Obligation or Derecognition Approaches, Revisited: Scope—Purchases/Sales of the Underlying Asset, Accounting for Arrangements with Service and Lease Components, Business Combinations—Topic 805 and IFRS 3, Additional Disclosures July 2010 July 19, 2010 
FASB Board Meeting—Business Combinations—Topic 805   June 23, 2010
Joint IASB/FASB Board Meeting—Lessor Accounting—Accounting for Arrangements with Service and Lease Components under the Derecognition Approach, Accounting for Purchase Options, Lessor Accounting—Accounting Models, Additional Analysis of Lessor Models June 2010 June 17, 2010
Joint IASB/FASB Board Meeting—Lessor Accounting—Derecognition Approach—Transition, Lessor Accounting—Accounting for Arrangements with Service and Lease Components under the Derecognition Approach June 2010 June 16, 2010
FASB Board Meeting—Lessor Accounting—Leveraged Leases   June 9, 2010
Joint IASB/FASB Board Meeting— Derecognition Approach—Residual Asset Supplementary Memo, Derecognition Approach—Treatment of Options Supplementary Memo, Derecognition Approach—Contingent Rentals and Residual Value Guarantees, Derecognition Approach—Accounting for Subleases, Derecognition Approach—Presentation May 2010 May 19, 2010 
Joint IASB/FASB Board Meeting— Lessor Accounting—Lessor Performance Obligation, Derecognition Approach to Lessor Accounting, Derecognition Approach—Residual Asset, Derecognition Approach—Treatment of Options May 2010  May 18, 2010 
Joint IASB/FASB Board Meeting (via videoconference)—Lessor Disclosures, Lessor Accounting: Impairment of Assets Supplement April 2010 April 22, 2010 
Joint IASB/FASB Board Meeting (via videoconference)—Long-term Leases of Land, Lessor Accounting: Impairment of Assets, Information About Total Cash Rentals Paid, Lessor Accounting for Purchase Options April 2010 April 21, 2010 
Joint IASB/FASB Board Meeting (via videoconference)—Accounting for Subleases, Accounting for the Lessor’s Performance Obligation, Sale and Leaseback Transactions April 2010 April 20, 2010 
Joint IASB/FASB Board Meeting (via videoconference)—Lessee Accounting: Presentation, Lessor Accounting: Presentation March 2010 March 23, 2010 
Joint IASB/FASB Board Meeting (via videoconference)—Accounting for Arrangements with Lease and Service Elements March 2010 March 22, 2010 
Joint IASB/FASB Board Meeting (via videoconference)—Lessee Accounting: Disclosures, Lessor Accounting: Transition, Measurement at Initial Recognition, Residual Value Guarantees March 2010 March 17, 2010 
Joint IASB/FASB Board Meeting (via videoconference)—Lessee Transition, Definition of the Interest Rate Implicit in the Lease February 2010 February 18, 2010 
Joint IASB/FASB Board Meeting (via videoconference)—Accounting for Changes in Contingent Rentals, Purchases or Sales of the Underlying Asset, Initial Direct Costs February 2010 February 17, 2010 
Joint IASB/FASB Board Meeting (via videoconference)—Definition of a Lease February 2010 February 2, 2010 
Joint IASB/FASB Board Meeting—Subsequent Measurement of Leases with Options and Contingent Rentals under Amortized Cost, Scope: Exclusion of Short-Term Leases, Lessor Accounting: Investment Properties January 2010 January 20, 2010 
Joint IASB/FASB Board Meeting (via videoconference)—Scope: Purchases and Sales January 2010 January 5, 2010  
Joint IASB/FASB Board Meeting—Lessee Accounting: Contingent Rentals, Lessor Accounting: Contingent Rentals, Scope: Intangibles, Scope: Non-Core and Short-Term Leases December 2009 December 16, 2009  
Joint IASB/FASB Board Meeting—Lessee Accounting: Initial and Subsequent Measurement, Lessor Accounting: Initial and Subsequent Measurement, Lessee Term Options, and Lessor Term Options November 2009 November 18, 2009 
Joint IASB/FASB Board Meeting—Reconfirmation of the Right-of-Use Approach for Lessees, In-Substance Purchases/Sales, Lessor Accounting Models, Timing of Initial Recognition October 2009 October 28, 2009  
IASB/FASB Board Meeting—Comment Letter Analysis and Plan for Redeliberations September 2009 September 16, 2009 
Joint Working Group Meeting (London)
September 2009
Joint IASB/FASB Board Meeting—Lessor: Measurement and Presentation of the Lessor’s Receivable and Performance Obligation July 2009  July 23, 2009 

IASB/FASB Board Meeting—Lessee: Sale and Leaseback Transactions, Impairment of Right-of-use Asset, Revaluation of Right-of-use Asset, Initial Direct Costs, and Transition

June 2009

June 17, 2009

IASB/FASB Board Meeting—Lessor Accounting under the Right-of-Use Model

May 2009

May 18, 2009

Joint IASB/FASB Board Meeting (via videoconference)—How to Proceed with a Joint Leases Discussion Paper

January 2009

January 22, 2009

IASB/FASB Board MeetingProject Scope, An Overview of Lessor Accounting, and Consideration of Sublessor Accounting

January 2009

January 14, 2009

IASB/FASB Board MeetingsInitial Recognition and Measurement of the Lessee’s Obligation to Pay Rentals, Subsequent Measurement, Lease Presentation, and Subleases

November 2008

November 19, 2008

Joint Working Group Meeting (Norwalk)

October 7, 2008

October 7, 2008

IASB/FASB Board Meetings—Approach to Project (Lessor Accounting), Options to Extend or Terminate a Lease, Contingent Rentals, Measurement, and Classification Criteria

July 2008

July 23, 2008

IASB/FASB Board Meetings—Other Lessee Obligations and Variable Lease Payments

October 2007

October 17, 2007

IASB/FASB Board Meetings—Measurement of a Lessee’s Liability to the Lessor, Measurement of a Lessee’s Right-to-Use Asset, and Initial Recognition of Assets and Liabilities in Lease Contracts

June 2007

June 27, 2007

IASB Board Meeting/FASB Education Session—Options to Terminate or Extend a Lease

May 2007

N/A

Joint IASB/FASB Board Meeting (London) —Scope

April 2007

April 24, 2007

IASB/FASB Board Meetings—Assets and Liabilities and Different Accounting Models

March 2007

March 21, 2007

Joint Working Group Meeting (London)

 

February 15, 2007

February 15, 2007

IASB/FASB Board Meetings—Agenda Decision

July 2006

July 19, 2006

Joint IASB/FASB Board Meeting (London)

April 2006

IASB Board Meeting—Preliminary Discussion of a Project on Leases

March 2006

N/A



Back to FASB Home
Back to IASB Home