Key Takeaways from the December 16, 2014 FASB/IASB Lease Meeting

The topic of leases has been an ongoing point of discussion for the Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB). They have been diligently revisiting the proposals outlined in the May 2013 Exposure Draft on Leases, with a particular focus on refining the definition of what constitutes a lease.

During their latest deliberations, building upon discussions held in the joint Board meeting of October 2014, a significant decision was made. The Boards opted not to include a requirement in the lease definition stipulating that the lessee (customer) must possess the ability to derive benefits from directing the use of an identified asset independently or in conjunction with other resources that may be sold separately or obtained within a reasonable timeframe. Consequently, the definition of a lease will align with the parameters set forth in the October 2014 joint Board meeting.

This clarification brings a level of consistency and stability to the understanding of what constitutes a lease, streamlining accounting practices for entities globally. By eliminating the requirement for lessees to have the capacity to direct the use of a specific asset and other resources, the Boards aim to provide more clarity and coherence in lease accounting standards.

Looking ahead, the FASB and the IASB will continue their deliberations on the subject of leases in forthcoming Board meetings. These ongoing discussions signify the commitment of both Boards to fine-tune and refine lease accounting standards, ultimately promoting transparency and facilitating better financial reporting practices in the global business environment.

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