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A Perspective on the Joint IASB/FASB Exposure Draft on Accounting for Leases


Yuri Biondi


French National Center for Scientific Research (CNRS)

Robert J. Bloomfield


Cornell University - Samuel Curtis Johnson Graduate School of Management

Jonathan C. Glover


Carnegie Mellon University - David A. Tepper School of Business

Karim Jamal


University of Alberta - Department of Accounting, Operations & Information Systems

James A. Ohlson


New York University (NYU) - Leonard N. Stern School of Business; New York University (NYU) - Department of Accounting, Taxation & Business Law

Stephen H. Penman


Columbia University - Department of Accounting

Eiko Tsujiyama


Waseda University - Graduate School of Commerce

T. Jeffrey Wilks


Brigham Young University

February 23, 2011

Accounting Horizons, Vol. 25, No. 4, 2011
University of Alberta School of Business Research Paper No. 2013-681
Johnson School Research Paper Series No. 16-2011

Abstract:     
The International Accounting Standards Board (IASB) and The Financial Accounting Standards Board (FASB) recently issued a joint exposure draft on accounting for leases. This exposure draft seeks to shift lease accounting from an “ownership” model to a “right-to-use” model. Under the current ownership model, leases can be reported on balance sheet (finance leases) if certain tests are met, or off balance sheet (operating leases) if those tests are not met. The new model seeks to report all leases on the balance sheet based on the present value of lease obligations without any bright line tests, and no sharp on or off the balance sheet classifications.

We are sympathetic to the standard setters concern that the current lease standard is being manipulated improperly by managers resulting in large amount of debt being reported off balance sheet. We provide a discussion of current lease accounting and the proposed exposure draft. We also comment on five key issues covered by the exposure draft: the definition of a lease, the initial measurement and eventual reassessment at fair values, the accounting for lessors, the impact of lease accounting on recognition and income measurement, and classification of lease accounting elements and their impact on accounting ratios.

This comment was developed by the Financial Accounting Standards Committee of the American Accounting Association and does not represent an official position of the American Accounting Association.

Number of Pages in PDF File: 16

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Date posted: February 28, 2011 ; Last revised: June 11, 2013

Suggested Citation

Biondi, Yuri and Bloomfield, Robert J. and Glover, Jonathan C. and Jamal, Karim and Ohlson, James A. and Penman, Stephen H. and Tsujiyama, Eiko and Wilks, T. Jeffrey, A Perspective on the Joint IASB/FASB Exposure Draft on Accounting for Leases (February 23, 2011). Accounting Horizons, Vol. 25, No. 4, 2011; University of Alberta School of Business Research Paper No. 2013-681; Johnson School Research Paper Series No. 16-2011. Available at SSRN: http://ssrn.com/abstract=1768083 or http://dx.doi.org/10.2139/ssrn.1768083

Contact Information

Yuri Biondi (Contact Author)
French National Center for Scientific Research (CNRS) ( email )
ESCP Europe
79, avenue de la Republique
75011 Paris
France
HOME PAGE: http://yuri.biondi.free.fr/
Robert J. Bloomfield
Cornell University - Samuel Curtis Johnson Graduate School of Management ( email )
450 Sage Hall
Ithaca, NY 14853
United States
607-255-9407 (Phone)
607-254-4590 (Fax)
Jonathan C. Glover
Carnegie Mellon University - David A. Tepper School of Business ( email )
5000 Forbes Avenue
Pittsburgh, PA 15213-3890
United States
412-268-8499 (Phone)
412-268-6837 (Fax)
Karim Jamal
University of Alberta - Department of Accounting, Operations & Information Systems ( email )
Edmonton, Alberta T6G 2R6
Canada
780-492-5829 (Phone)
780-492-3325 (Fax)

James A. Ohlson
New York University (NYU) - Leonard N. Stern School of Business ( email )
44 West 4th Street
New York, NY NY 10012
United States
New York University (NYU) - Department of Accounting, Taxation & Business Law ( email )
40 West 4th Street
Tisch Hall - Suite 433
New York, NY 10012
United States
212-998-0065 (Phone)
212-995-4004 (Fax)
Stephen H. Penman
Columbia University - Department of Accounting ( email )
3022 Broadway
New York, NY 10027
United States
212-854-9151 (Phone)
212-316-9219 (Fax)

Eiko Tsujiyama
Waseda University - Graduate School of Commerce ( email )
1-6-1, Nishi-Waseda
Shinjuku-ku, Tokyo 169-8050
Japan
81-3-5286-2048 (Phone)
81-3-3203-7067 (Fax)
HOME PAGE: http://www.waseda.jp/gradcom/index-e.html
Thomas Jeffrey Wilks
Brigham Young University ( email )
School of Accountancy
526 Tanner Building
Provo, UT 84602 84602
United States
801-422-3930 (Phone)
801-422-0621 (Fax)
HOME PAGE: http://marriottschool.byu.edu/directory/details?id=5337
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