043 Exposure Draft “Leases”
International Accounting Standards Board (IASB) and Financial Accounting Standards Board (FASB) issued an exposure draft “Leases” on August 17 2010, and Japanese version was released by Accounting Standards Board of Japan (ASBJ) on October 15 2010. This revised a lot of articles listed on the IAS17 “Leases”, and today we will talk more about it here.
This ED suggested an adoption of “right-of-use model” in the accounting of leases, which would make a drastic change to the accounting treatment by lessor and lessee.
From the lessee’s side of the story, the classification between finance lease and operating lease can be no longer seen, and when the lessee has an operating lease contract, the leased asset and lease liability have to be recognized at the same time.
On the other hand, lessor’s accounting depends on whether or not the lessor retains an exposure to risk or rewards accompanied with original assets. If an important risk or rewards are retained, they should apply performance obligation approach (in which they continue the recognition of original assets and recognize lease receivable and lease liability. This is considered to be a stricter accounting method than operating lease). If not, they apply derecognition approach, which is the same accounting method as the currently effective one.
We suppose that a revision of Japanese accounting standards on this matter will be considered because of this ED.
