The FASB voted last week to issue an updated Lease Accounting Exposure Draft that will be available for review by interested parties in May. There has been considerable delay in getting to this point and the vote at 4-3 for issuance was clearly not without controversy. The major questions revolve around the complexity of the implementation of the proposed standard and how financial statement preparers will be able to differentiate between the two types of leases currently being proposed. Some leases, mainly real property leases, would have a straight line expense recognition while other leases, mainly equipment leases, would be treated as financings with accelerated expense recognition.
It is important that interested parties monitor this project by reviewing the updated Exposure Draft and the redeliberations by the FASB Board members that will undoubtedly occur.