IASB ED/2013/6 Leases

The IASB has published for public comment a revised Exposure Draft outlining proposed changes to accounting for leases which is intended to supersede IAS 17 Leases. The leases project is a converged project between the IASB and the US Financial Accounting Standards Board.

The IASB website announcement states:

“The Boards have developed an approach to lease accounting that would require a lessee to recognise assets and liabilities for the rights and obligations created by leases. A lessee would recognise assets and liabilities for leases of more than 12 months.

Stakeholders have informed the Boards that there are a wide variety of lease transactions with different economics. To better reflect those differing economics, the revised Exposure Draft proposes a dual approach to the recognition, measurement and presentation of expenses and cash flows arising from a lease. For most real estate leases, a lessee would report a straight-line lease expense in its income statement. For most other leases, such as equipment or vehicles, a lessee would report amortisation of the asset separately from interest on the lease liability. The Boards are also proposing disclosures that should enable investors and other users of financial statements to understand the amount, timing, and uncertainty of cash flows arising from leases.

The Boards are also proposing changes to how equipment and vehicle lessors would account for leases that are off-balance-sheet. Those changes would provide greater transparency about such lessors’ exposure to credit risk and asset risk.”

The NZASB strongly encourages constituents to read the exposure draft and consider how the proposed requirements will impact their current accounting for leases.

Comments can be made to the New Zealand Accounting Standards Board (NZASB) addressed to the Chief Executive, External Reporting Board, PO Box 11250, Manners Street Central, Wellington 6142, or by email to submissions@xrb.govt.nz. Comments can also be made electronically to the IASB through its website (www.ifrs.org), using the ‘Comment on a proposal’ page. If you comment directly to the IASB, please send a copy to the XRB.

Comments are due to the NZASB by 16 August 2013 and to the IASB by 13 September 2013.

Click here for the ED

Click here for the Basis for Conclusions

Click here for the Illustrative Examples

Click here for the Snapshot


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