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Exposure Draft on Leases Released

Posted 1:25 PM by

The US Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB) have published for comment the following joint proposals to improve the financial reporting of lease contracts: FASB Exposure Draft (ED), Leases (Topic 840) and IASB ED, Leases (also released was a Basis for Conclusions by the IASB). The proposals are one of the main projects included in the boards’ Memorandum of Understanding.  If adopted, the proposals will have a significant impact on the balance sheets of those in the manufacturing and distribution industries. 

The boards believe the proposals will improve the financial reporting information available to investors about the financial effects of lease contracts. The proposals include a consistent approach to lease accounting for both lessees and lessors by using a “right-of-use” approach. This approach would result in a liability for payments arising under the lease contract and an asset for the right to use being included in the lessee’s statement of financial position. 

Comments on the proposals are due December 15, 2010.

About the Author
Jason Patch is a partner in Katz, Sapper & Miller’s Audit and Assurance Services Group and leads the firm’s Manufacturing and Distribution Services Group. Jason works with clients to ensure accurate financial reporting, keeping an eye on their bottom line, helping them avoid risk, and maximizing efficiencies. Connect with him on LinkedIn.

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