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IASB meeting summaries and observer notes

 IASB January 2011



Comment letter summary

The IASB and FASB considered a summary of:

  1. the feedback received in response to the exposure draft Leases, which was published for public comment in August 2010; and
  2. feedback from outreach activities undertaken after the publication of the exposure draft to explain the proposals and to obtain comments on them.

The boards also discussed the plan for redeliberating the issues raised by respondents to the exposure draft.

The boards plan to begin redeliberations by considering two of the fundamental issues raised by respondents, which are the definition of a lease and the next steps to be taken relating to lessor accounting.

Definition of a lease

The boards discussed the definition of a lease and how to distinguish between a lease contract and a service contract. The boards also discussed whether, under a right-of-use model, all lease contracts should have the same subsequent measurement approach.

This session was for education only, and thus the boards did not make any technical decisions.


Leases - education session on lessor accounting model(s)

The boards discussed the next steps for redeliberating the lessor accounting model proposed in the exposure draft Leases.

The boards noted the benefit of considering lease issues from both the perspective of a lessee and of a lessor and, therefore, decided that they should continue to address lessee and lessor accounting issues together. The boards could then decide later in the current leases project whether changes to the present lessor accounting model are needed, and if so, whether these changes should be made as part of the current leases project or as part of a separate project.

The boards also noted that some respondents questioned why the exposure draft proposes consistent application of a right-of-use model by all lessees, but proposes that application by lessors depends on an assessment of whether the lessor retains exposure to significant risks and benefits associated with the underlying asset. The boards noted that many respondents, including users, think that some lessees and lessors enter into lease contracts to finance the use of an underlying asset, whereas other lessees and lessors enter into lease contracts for other reasons, such as the operational flexibility provided by the contract. Consequently, the boards directed the staff to explore whether there should be two approaches to apply the right-of-use model by both lessees and lessors, and therefore two different patterns of profit or loss recognition, and how to differentiate between the two approaches.

This session was for education only, and thus the boards did not make any technical decisions.

Date: 1/19/2011