more-arw search

Lease accounting rules threatened by diverse viewpoints

Diverse views among accountants and reporters may stymie new lease

A new accounting standard governing lease accounting rules may be hitting a snag, according to a Bloomberg report. The diverse ways in which different analysts view leases is making it difficult for the boards to standardize the way they are reported.

The International Accounting Standards Board and the Financial Accounting Standards Board recently settled on a dual approach to lease accounting standards, whereby the cost of some leases are calculated evenly over the course of the agreement, while other leases are calculated in a way that expresses greater costs from higher interest payments earlier in the loan.

"If financial statement users were unified in the manner in which they looked at leases it would be much easier for the boards to tailor the outcome to meet investors' needs," Bloomberg said. "However, during a July 24 discussion with the FASB, members of its Investors Technical Advisory Committee made it clear that given the divergent views among analysts, the boards' solution is a compromise that misses the mark."

ITAC members unanimously oppose the dual approach favored by the two boards, which could make the goal of a standardized approach to lease accounting more difficult, Bloomberg said.