The Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB) (the Boards) jointly issued exposure drafts, Leases, on Aug. 17, 2010, which addressed accounting for leases by both the lessee and lessor. Since that date, the Boards have continued to discuss leases and have reached additional tentative decisions on lessee and lessor lease accounting.
The Boards’ objective of the lease project is to not only create common lease accounting requirements to ensure leases are recognized on the balance sheet, but also provide users of financial statements with useful and complete information about an entity’s leasing transactions. Lease transactions are widely used as a financing tool in today’s marketplace and have a major impact on the construction and real estate industries. The proposed changes will alter how both users of the financial statements and companies view lease transactions.