The Latest on Lease Accounting


By Todd Lucas

On June 1, 2011, the FASB and IASB (the Boards) met to discuss the new proposed lease accounting guidance. The discussion on leases at this meeting focused primarily on subsequent measurement issues relating to lessees, including foreign exchange differences, impairment, revaluation and residual value guarantees.

The Boards tentatively reached the following decisions:

  • Foreign Exchange Differences - That foreign exchange differences which relate to lease payment liability should be recognized in earnings, similar to existing foreign exchange guidance.
  • Impairment - Affirmed to refer to the existing guidance relative to impairment of right-to-use assets.
  • Revaluation - Affirmed to refer to the existing guidance relative to revaluation of right-to-use assets (IASB only).
  • Residual Value Guarantees – 1) Amounts payable under residual value guarantees included in the measurement of the lessee’s right-of-use asset should be amortized consistently with how other payments included in the measurement of the right-of-use asset are amortized, 2) Amounts payable under residual value guarantees included in the measurement of the lessee’s lease payment liability should be reassessed when events or circumstances indicate that there has been a significant change in the amounts expected to be payable under residual value guarantees, and 3) Amount of the change to the lease payment liability to make lease payments arising from changes in estimates of residual value guarantees should be recognized in earnings to the extent those changes relate to current or prior periods and as an adjustment to the right-to-use asset to the extent those changes relate to future periods.

Stay tuned for more updates on the proposed lease accounting as we near a final standard. 

Schneider Downs provides accountingtax, wealth management, technology and business advisory services through innovative thought leaders who deliver the expertise to meet the individual needs of each client. Our offices are located in Pittsburgh, PA and Columbus, OH.

This advice is not intended or written to be used for, and it cannot be used for, the purpose of avoiding any federal tax penalties that may be imposed, or for promoting, marketing or recommending to another person, any tax-related matter.

You’ve heard our thoughts… We’d like to hear yours

The Schneider Downs Our Thoughts On blog exists to create a dialogue on issues that are important to organizations and individuals. While we enjoy sharing our ideas and insights, we’re especially interested in what you may have to say. If you have a question or a comment about this article – or any article from the Our Thoughts On blog – we hope you’ll share it with us. After all, a dialogue is an exchange of ideas, and we’d like to hear from you. Email us at contactSD@schneiderdowns.com.

Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax, or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice.

© 2019 Schneider Downs. All rights-reserved. All content on this site is property of Schneider Downs unless otherwise noted and should not be used without written permission.