FASB FSP Will Require Recalculation of Leveraged Leases If Timing of Tax Benefits Affect Cash Flows

Norwalk, CT, July 13, 2006—The FASB today issued an FSP that will require companies to recalculate their leveraged leases if there is a change or projected change in the timing of cash flows relating to income taxes generated by the leveraged lease.  The FSP is being issued concurrent with today’s interpretation of FASB Statement No. 109, Accounting for Income Taxes.

Leveraged leases can provide significant tax benefits to the lessor, and the accounting for such transactions can be significantly influenced by the timing of tax benefits provided to the lessor. Changes in the timing and/or amount of these tax benefits may have a material affect on the cash flows of the transaction.

“Today’s FSP reflects our belief that accounting should fully reflect the economics of a transaction,” said Edward W. Trott, FASB Member. “Accordingly, any change in either the timing or the amount of the cash flows associated with these leveraged lease transactions will now be properly reflected in the financial statements.”

The guidance in this FSP shall be applied to fiscal years beginning after December 15, 2006.

About the Financial Accounting Standards Board

Since 1973, the Financial Accounting Standards Board (FASB) has been the designated organization in the private sector in the US for establishing standards of financial accounting and reporting. Those standards govern the preparation of financial reports and are officially recognized as authoritative by the Securities and Exchange Commission and the American Institute of Certified Public Accountants. Such standards are essential to the efficient functioning of the economy because investors, creditors, auditors and others rely on credible, transparent and comparable financial information. For more information about the FASB, visit its website at