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IASB meeting summaries and observer notes

IASB meeting summaries and observer notes


 IASB January 2013


 

The IASB held an education session on 29 January 2013 to discuss questions that have arisen during the drafting of the revised Leases Exposure Draft about the identification of lease components and the unit of account when applying the classification guidance.

No decisions were taken.

 

In this meeting, the IASB and the FASB discussed questions that have arisen during the drafting of the revised Leases Exposure Draft about the identification of lease components and the classification of leases.

The boards tentatively decided to include the following guidance in the revised Exposure Draft:

1. How to identify separate lease components within a contract. The guidance would be similar to the proposed guidance in paragraphs 28 and 29 of the 2011 Revenue Recognition Exposure Draft about the identification of separate performance obligations. An entity would be required to account for each separate lease component as a separate lease.

2. How to determine the nature of the underlying asset for classification purposes when one lease component contains the right to use more than one asset. The boards tentatively decided that an entity should determine the nature of the underlying asset for classification purposes on the basis of the nature of the primary asset within the lease component.
Fourteen IASB members and all FASB members agreed. One IASB member abstained.

The boards tentatively decided that when applying the classification guidance to a property lease component that contains both land and a building, an entity:

1. is not required to allocate lease payments between the land and the building; and

2. would assess whether the lease term is for a major part of the remaining economic life of the building.
Twelve IASB members and all FASB members agreed. One IASB member abstained.

 

Next steps

The Exposure Draft is planned for publication in the second quarter of 2013.

 

Date: 1/29/2013