VIEWpoint Issue 1 | 2023
2023 Compliance Trends: Staying Ahead in an Evolving Regulatory E...
2023 Tax Calendar
Companies dealing with leases will finally receive guidance on how the accounting for these leases will be implemented in the future, with the Financial Accounting Standards Board (FASB) and International Accounting Standards Board (IASB) announcing a revised proposal of financial reporting standards for leases.
In August 2010, FASB and IASB proposed several new accounting standards in line with the goal of converging U.S. and international accounting rules. The boards believe that U.S. generally accepted accounting principles (GAAP) and international financial reporting standards (IFRS) can be improved by developing one global standard on revenue recognition. U.S. GAAP comprises broad revenue recognition concepts and numerous requirements for particular industries or transactions, which can result in different treatment of economically similar transactions. FASB and IASB have called for nearly identical treatment in regards to the approach, measurement and presentation of expenses and cash flow as a result of lease activity. Lessees would recognize assets and liabilities for leases exceeding 12 months.
Due to the varied nature of leases, it was difficult to develop one approach to financial reporting that applies to all of them, hence the dual approach. This approach will help provide transparency for businesses with investors since leases will be recognized as liabilities on the balance sheet with disclosures related to them.
An effective date has not yet been set by the boards, but it is anticipated to go into effect in 2014. Comments are due by Sept. 13.
This publication is distributed for informational purposes only, with the understanding that Doeren Mayhew is not rendering legal, accounting, or other professional opinions on specific facts for matters, and, accordingly, assumes no liability whatsoever in connection with its use. Should the reader have any questions regarding any of the news articles, it is recommended that a Doeren Mayhew representative be contacted.
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