New lease accounting proposals have
sparked disquiet among lessors who claim they will have a negative
impact on business.
Critics believe that the proposed
new rules are confused, will restrict access to finance and could
result in some lessees breaking their loan covenants.
Go deeper with GlobalData
Access deeper industry intelligence
Experience unmatched clarity with a single platform that combines unique data, AI, and human expertise.
Julian Rose, head of asset finance
at the Finance and Leasing Association (FLA) said: “The IASB’s
proposals involve taking real numbers and replacing them with a
mish-mash of accountants’ assumptions, estimates and
adjustments.”
The exposure draft (ED) on lease
accounting was issued by the International Accounting Standards
Board (IASB) last month after an ostensive consultation with the
leasing industry.
On the lessor side, it proposes a
choice of the de-recognition approach and the performance
obligation model. On the lessee side, the proposals adopt a right
of use model.
Leaseurope has called on IASB to
simplify the standard. It claimed that the proposals are being
steamrolled through in order to meet an IASB deadline for
convergence with US Generally Accepted Accounting Principles (US
GAAP).
US Tariffs are shifting - will you react or anticipate?
Don’t let policy changes catch you off guard. Stay proactive with real-time data and expert analysis.
By GlobalDataTanguy van de Werve, director
general of Leaseurope, said: “We are disappointed the IASB and US
Financial Accounting Standards Board (FASB) have not yet taken on
board the feedback that we and many others have provided.” He
called on the European Commission to carry out a robust impact
assessment before integrating the proposals into law.
John Williamson, director,
PricewaterhouseCoopers, said: “The boards’s consensus view in the
ED is based on an interpretation of the overall IFRS framework and
has been heavily influenced by a desire to make the proposals
consistent with decisions taken on other related projects, in
particular revenue recognition. It has led to a level of complexity
in the measurement and re-measurement of leased assets and
obligations, which some may find unwelcome.”
The IASB comment period runs until
15 December.
For more on IFRS lease
accounting, see Debate: Are the new lease accounting rules an
improvement? and New lease accounting rules.
