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FASB to Draft Final Leasing Standard Update

The Financial Accounting Standards Board (FASB) is nearing the end of its deliberations on the proposed Accounting Standards Update to Leases (Topic 842).

Part of a joint project with the International Accounting Standards Board (IASB), the FASB’s proposed update to Topic 842 would create two models for lease classification, Type A and Type B. The FASB’s proposed update would be slightly different from the IASB’s, which decided on a single model (Type A) for lessee accounting. In both the FASB’s and the IASB’s proposed updates, lessor accounting determines the lease classification on the basis of whether the lease is effectively a financing or a sale, rather than an operating lease.

During its February 2015 meeting, the FASB discussed several elements of the update, including the reassessment of variable lease payments, lessee and lessor transition, sale and leaseback transition, build-to-suit arrangements and lessee disclosure of the weighted-average discount rate for Type A leases (sweep issue).

Learn more about this update in our latest MHM Messenger.

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