The IASB and the FASB discussed a scope issue, the application of financial asset guidance to the right to receive lease payments, other subsequent measurement issues for lessors, and the accounting for residual value guarantees by lessors.
The boards tentatively decided not to provide a scope exclusion from the leases standard for assets that are often treated as inventory, such as non-depreciating spare parts, operating materials, and supplies, and that are associated with the leasing of another underlying asset. The forthcoming revised exposure draft will provide an example illustrating the effect of this decision. All IASB and FASB members agreed.
Lessor�Application of financial asset guidance to the right to receive lease payments
The boards tentatively decided that:
a. A lessor should subsequently measure the right to receive lease payments using the effective interest method.
b. A lessor should refer to existing financial instruments guidance (IAS 39 Financial Instruments: Classification and Measurement and Topic 310 Receivables in the FASB Accounting Standards Codification�) to assess the impairment of that right to receive lease payments.
c. The leases standard should not contain an option for fair value measurement of the right to receive lease payments.
Fourteen IASB members and all FASB members agreed.
The boards instructed the staff to analyse further whether there should be a requirement to measure the right to receive lease payments at fair value if that right were held for sale.
Lessor�Other subsequent measurement issues
The boards tentatively decided that a lessor should refer to IAS 36 Impairment of Assets or Topic 360 Property, Plant, and Equipment in the FASB Accounting Standards Codification�, as appropriate, to assess the impairment of the residual asset. Fourteen IASB members and four FASB members agreed.
The boards tentatively decided that a lessor should recognise immediately in profit or loss changes in the right to receive lease payments due to reassessments of variable lease payments that depend on an index or a rate. All IASB members and six FASB members agreed.
The IASB tentatively decided that revaluation of the residual asset should be prohibited. Thirteen IASB members agreed.
Lessor�Residual value guarantees
The boards tentatively decided that:
a. the leases standard would provide guidance on accounting for all residual value guarantees, regardless of whether they are provided by a lessee, a related party or a third party. All IASB and FASB members agreed.
b. a lessor would not recognise amounts expected to be received under a residual value guarantee until the end of the lease. However, the lessor would consider those guarantees when determining whether the residual asset is impaired. Fourteen IASB members and five FASB members agreed.
The FASB and the IASB discussed the presentation requirements for lessors, including presentation in the statement of financial position and in the statement of cash flows. They also discussed transition for lessees.
Presentation: lessor statement of financial position
The boards tentatively decided that a lessor should either:
- Present the lease receivable and the residual asset separately in the statement of financial position, summing to a total to be called 'lease assets'; or
- present the lease receivable and residual asset together in a single line item�'lease assets'�in the statement of financial position, and separately disclose those two amounts in the notes to the financial statements.
Nine IASB and five FASB members agreed.
Presentation: lessor statement of cash flows
The boards tentatively decided that a lessor should classify the cash inflows from a lease as operating activities in the statement of cash flows. Twelve IASB members and all FASB members agreed.
The boards discussed the transition requirements for lessees when first applying the proposed leases standard. The boards will continue to discuss lessee transition when they discuss lessor transition at a future meeting. No decisions were reached.