Stay Informed
iLeasePro Newsletter

Expert Knowledge to Your Inbox - SignUp Now!

Lease Accounting Project: February 2015 Update


The Financial Accounting Standards Board (“FASB”) and the International Accounting Standards Board (“IASB”), collectively (“the Boards”) met separately in February 2015 and substantially concluded their redeliberations on the proposed changes to lease accounting. The Boards came to different conclusions on a number of matters.

Regarding lessee transition to the new accounting standard, the FASB decided that lessees would be required to utilize the modified retrospective approach to transition with certain options for relief to be outlined specifically in the new standard. The FASB would prohibit using the full retrospective transition approach.

The IASB decided that the accounting for leases currently classified as finance leases would not change at the date of initial application of the new standard. For leases previously classified as operating leases, the IASB decided to allow either a full retrospective approach or a modified retrospective approach and provided specific guidance on how the modified retrospective approach would be implemented.

The modified retrospective approach provides a method by which the Lease Liability and Right of Use Asset are recorded on the balance sheet at the time of adoption and in comparative periods in amounts approximating the results of a full retrospective approach.  Any difference between the Right of Use Asset and the Lease Liability as a result of the application of this approach is recorded in retained earnings.

The IASB also decided to include a lessee recognition and measurement exemption for leases of small assets. The definition of small assets is yet to be finalized but the IASB discussions have focused on an individual asset threshold of $5,000.

As with all decisions made to date, the conclusions discussed above are tentative. The Boards have instructed their staffs to begin drafting the new standard. An effective date for implementation has yet to be set by the Boards. Final issuance of the new standard is expected sometime in the second half of 2015.




Related: iLeasePro Free Trial, iLeaseXpress, iLeaseXpress Unlimited, ASC 842 Financial Reporting, ASC 842 Balance Sheet Reporting, ASC 842 Income Statement Reporting, ASC 842 Cash Flow Reporting, ASC 842 Statement of Shareholder Equity, ASC 842 Disclosure Notes, ASC 842 Management Discussion, ASC 842 Comprehensive Income, ASC 842 Glossary of Terms, ASC 842 Journal Entries, ASC 842 Software, When Is the ASC 842 Compliance Date, FASB Lease Accounting Software, Understanding the New FASB ASC 842 Lease Accounting Standard, How Does a Lease Balance Sheet Change After the New Standard?, Tracking Lease Details After ASC 842, Deferred Rent Explained Under the ASC 842, Guide to Lease Classification, Overview of Relevant Borrowing Rate, ASC 842 Footnote Disclosure, Lease Accounting, What Does Lease Accounting Software Do?, Key Features of A Lease Accounting Software, How to Never Miss Important Lease Dates, Scaling Your Lease Accounting Software to Your Business Needs, How to Select the Right Lease Solution, How to Set Up Lease Accounting Software, What is the Best Lease Accounting Software?, Overview of the Types of Leases, Equipment Lease Software, How the Right Lease Management Software Makes Equipment Leases Easier, Lease Tracking Software, How The Right Software Can Help You Manage Lease Data, Five Benefits of a SaaS Lease Management Solution, A Centralized Lease Portfolio Making Asset Management Easier, Lease Analysis 101, Lease Analysis: The Financial Metrics, Lease Abstraction, The Importance of Lease Abstraction for Lessees, The Lease Data an Abstract Should Include, What Software Do I Need for Lease Abstracting?, Navigating The ASC 842 Accounting Audit, Ultimate Lease Accounting Audit Checklist, Essential Guide To Engaging Auditors, Leveraging AI for Enhanced Year-End Audits Transitioning to the ASC 842 Standard Lease Document Management ASC 842 Short-Term Leases Practical Expedients Lease Modifications & Remeasurements Lease Variable Payments Embedded Leases Monitoring Critical Lease Dates Transportation - Navigate the ASC 842 The Impact of the ASC 842 on Regulatory Policies in Lease Management & Lease Accounting Integrating Lease Accounting into Your Month-End Closing Process The Modified Retrospective Approach in ASC 842 Determining the Incremental Borrowing Rate