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Monday 01 September 2014

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Leases

IASB meeting summaries and observer notes


 IASB / FASB January 2010


 

 

The boards discussed:

  • How to measure leases after initial recognition with options and contingent rentals under the amortised cost-based approach
  • Whether to provide a concession for short-term leases; and
  • How to account for investment properties held by lessors.

Measurement after initial recognition of leases with options and contingent rentals under amortised cost

The boards tentatively decided that:

  • The lessee's discount rate should not be revised when there are subsequent changes in the expected lease term.
  • The lessee's discount rate should not be revised when there are subsequent changes in the amounts payable under contingent rentals unless the rentals are contingent on variable reference interest rates.
  • The discount rate used by the lessor should not be revised when there are subsequent changes in the expected lease term.
  • The discount rate used by the lessor should not be revised when there are subsequent changes in the amounts payable under contingent rentals unless the rentals are contingent on variable reference interest rates.

Concession for short-term leases

The boards tentatively decided:

  • to permit lessees to use a simplified form of lease accounting for short-term leases.
  • that under this simplified accounting, the lessee would recognise the gross amounts payable and a corresponding right-of-use asset under a short-term lease in the statement of financial position.
  • to provide an optional concession for short-term leases for lessors.
  • that short-term leases would be defined as those leases that have a maximum possible lease term of less than 12 months.

Investment properties

The boards tentatively decided that the new lessor accounting requirements would be required if the lessor measures its investment properties at cost.

The IASB tentatively decided that if a lessor of investment properties measures its investment properties at fair value in accordance with IAS 40 Investment Property, it would not apply the new lessor accounting requirements to the lease.

Because the FASB does not have an option to fair value investment properties, it instructed the FASB staff to prepare an agenda request discussing whether to permit or require investment properties to be carried at fair value under US GAAP.

The boards will continue discussion of lessee and lessor accounting at the February 2010 meeting.

 

Date: 1/20/2010