Issues in Lessor Accounting: The Forgotten Half of Lease Accounting

2011 ◽  
Vol 25 (2) ◽  
pp. 247-266 ◽  
Author(s):  
Mark P Bauman ◽  
Richard N Francis
Keyword(s):  
Balance Sheet ◽  
Accounting Standards ◽  
Decision Makers ◽  
Financial Accounting ◽  
Financial Statement ◽  
International Accounting Standards ◽  
Financial Accounting Standards Board ◽  
Disclosure Quality ◽  
Residual Values ◽  
Lease Accounting

SYNOPSIS In July 2006, the International Accounting Standards Board and the Financial Accounting Standards Board (the “Boards”) added a leasing project to their agenda. In August 2010, the Boards jointly released an exposure draft proposing a “right-of-use” model for the recognition of lease-related assets and liabilities. In their deliberations, the Boards noted numerous studies focusing on lessee accounting, but very little research examining lessor-related topics. To address this gap in the literature, this paper identifies key reporting and disclosure issues associated with lessors, and suggests improvements that could be incorporated into lease accounting guidance. This study is based on an analysis of the financial statement disclosures of 57 of the 100 largest equipment lessors in the U.S. market. Disclosure quality, residual values, and the balance sheet impact of the proposal are examined, and numerous suggestions are offered to enhance the usefulness of lessor financial statement disclosures for decision makers.

A Perspective on the Joint IASB/FASB Exposure Draft on Accounting for Leases

2011 ◽  
Vol 25 (4) ◽  
pp. 861-871 ◽  
Author(s):  
Yuri Biondi ◽  
Robert J. Bloomfield ◽  
Jonathan C. Glover ◽  
Karim Jamal ◽  
James A. Ohlson ◽  
...  
Keyword(s):  
Balance Sheet ◽  
Accounting Standards ◽  
Financial Accounting ◽  
International Accounting Standards ◽  
Financial Accounting Standards Board ◽  
Operating Leases ◽  
Key Issues ◽  
Definition Of ◽  
The Impact ◽  
Lease Accounting

SYNOPSIS The International Accounting Standards Board (IASB) and the Financial Accounting Standards Board (FASB) recently issued a joint exposure draft on accounting for leases. This exposure draft seeks to shift lease accounting from an “ownership” model to a “right-of-use” model. Under the current ownership model, leases can be reported on balance sheet (finance leases) if certain tests are met, or off balance sheet (operating leases) if those tests are not met. The new model seeks to report all leases on the balance sheet based on the present value of lease obligations without any bright line tests, and no sharp on or off the balance sheet classifications. We are sympathetic to the standard setters' concern that the current lease standard is being manipulated improperly by managers, resulting in large amounts of debt being reported off balance sheet. We provide a discussion of current lease accounting and the proposed exposure draft. We also comment on five key issues covered by the exposure draft: the definition of a lease, the initial measurement and eventual reassessment at fair values, the accounting for lessors, the impact of lease accounting on recognition and income measurement, and classification of lease accounting elements and their impact on accounting ratios. JEL Classifications: M40.

scholarly journals The Joint FASB/IASB Lease Project: Discussion And Industry Implications

2011 ◽  
Vol 9 (9) ◽  
pp. 29 ◽  
Author(s):  
John Kostolansky ◽  
Brian Stanko
Keyword(s):  
Balance Sheet ◽  
Accounting Standards ◽  
Financial Accounting ◽  
International Accounting Standards ◽  
Financial Accounting Standards Board ◽  
Font Size ◽  
Operating Leases ◽  
Accounting Rules ◽  
The Impact ◽  
Lease Accounting

<span style="font-family: Times New Roman; font-size: small;"> </span><p style="margin: 0in 0.5in 0pt; text-align: justify; mso-pagination: none;" class="MsoNormal"><span style="color: black; font-size: 10pt; mso-themecolor: text1;"><span style="font-family: Times New Roman;">Over several decades, the Financial Accounting Standards Board and International Accounting Standards Board have enacted numerous changes to the controversial lease accounting rules. As currently prescribed, operating leases are treated as rental arrangements whereby the lessee does not record a liability - a situation generally referred to as off-balance sheet financing. In an attempt to increase transparency and comparability, the FASB and IASB will soon require all leases to be capitalized. This paper quantifies the impact of the new leasing standard on the financial statements and ratios of the firms and industries represented in the S&amp;P 100 under a variety of discount rates. </span></span></p><span style="font-family: Times New Roman; font-size: small;"> </span>

scholarly journals Proposed Lease Accounting For Lessees

2011 ◽  
Vol 9 (1) ◽  
Author(s):  
Stuart Shough
Keyword(s):  
Accounting Standards ◽  
Financial Accounting ◽  
International Accounting ◽  
International Accounting Standards ◽  
Financial Accounting Standards Board ◽  
Font Size ◽  
Accounting Model ◽  
Lease Accounting ◽  
International Accounting Standards Board

<p class="MsoNormal" style="text-align: justify; line-height: normal; margin: 0in 0.5in 0pt; mso-pagination: none;"><span style="font-family: &quot;Times New Roman&quot;,&quot;serif&quot;; font-size: 10pt;">On August 17, 2010, the Financial Accounting Standards Board and the International Accounting Standards Board jointly issued exposure drafts proposing a new accounting model for leases. This paper explains how a lessee would account for leases under this proposal.</span></p>

scholarly journals ¿Ingresos integrales, teoría de la entidad o concepto de entidad? Un compromiso diplomático en la redacción de informes financieros

2017 ◽  
Vol 13 (25) ◽  
pp. 8
Author(s):  
Marco Angelo Marinoni ◽  
Andrea Cilloni
Keyword(s):  
Balance Sheet ◽  
Accounting Standards ◽  
Financial Statements ◽  
Financial Accounting ◽  
International Accounting ◽  
International Accounting Standards ◽  
Financial Accounting Standards Board ◽  
Accounting Systems ◽  
Generally Accepted Accounting Principles ◽  
Income Statement

The globalizations of markets and increased international cooperation in the harmonized accounting systems have highlighted the difficulties inherent in the development of generally accepted accounting principles. The Financial Accounting Standards Board, FASB, and the International Accounting Standards Board, IASB, are therefore working - through shared projects – in conducting a “Conceptual Framework Project”, which will lead to increased knowledge and understanding of the principles of international accounting convergence.The process of international harmonization has defined the concept of “Comprehensive Income”, i.e. a new structure of the Income Statement, in which they reside clearly even charges and unrealized gains (as final assets adjustments, monetary exchange variations and so on). The Balance Sheet and the Financial Statements in general, continue to maintain an approach prone to theory of property valuation, given the shareholder, as the main carrier of social interest.

scholarly journals Financial Reporting Impact Of The Operating Lease Classification

2012 ◽  
Vol 28 (6) ◽  
pp. 1509 ◽  
Author(s):  
John Kostolansky ◽  
Dora Altschuler ◽  
Brian B. Stanko
Keyword(s):  
North America ◽  
Financial Reporting ◽  
Balance Sheet ◽  
Accounting Standards ◽  
Financial Statements ◽  
Financial Accounting ◽  
International Accounting Standards ◽  
Financial Accounting Standards Board ◽  
Operating Leases ◽  
The Impact

The Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB) are preparing to make changes to accounting standards for leasing that will have a significant impact on the financial statements of a large number of companies. The proposed standard will eliminate the operating lease classification, and if passed, companies using this classification will be required to report additional assets and liabilities on the balance sheet. This study estimates the impact of this change in accounting standards on the financial statements and several key financial ratios for an extensive sample of companies and industries from the Compustat North America database. It is important that users of financial statements understand and are prepared for these changes prior to implementation, particularly for industries in which operating leases are heavily utilized.

Standard-Setting Issues and Academic Research Related to the Accounting for Financial Asset Transfers

2007 ◽  
Vol 21 (1) ◽  
pp. 59-80 ◽  
Author(s):  
Katherine Schipper ◽  
Teri Lombardi Yohn
Keyword(s):  
Cross Section ◽  
Financial Reporting ◽  
Academic Research ◽  
Balance Sheet ◽  
Accounting Standards ◽  
Financial Accounting ◽  
Future Research ◽  
Financial Asset ◽  
International Accounting Standards ◽  
Financial Accounting Standards Board

A large number and cross-section of firms undertake financial asset transfers. The Financial Accounting Standards Board and the International Accounting Standards Board have been grappling with the appropriate accounting for financial asset transfers, especially with respect to derecognition—that is, when the assets should be removed from the transferor's balance sheet. This paper discusses the financial reporting issues surrounding financial asset transfers and summarizes the related academic research. It also discusses potentially useful future research that could provide insights for standard-setters and suggests some impediments to that research.

The American Accounting Association’s Financial Reporting Policy Committee’s Response to the Preliminary Views on Financial Statement Presentation

2010 ◽  
Vol 24 (2) ◽  
pp. 279-296 ◽  
Author(s):  
Mark Bradshaw ◽  
Carolyn Callahan ◽  
Jack Ciesielski ◽  
Elizabeth Gordon ◽  
Mark Kohlbeck ◽  
...  
Keyword(s):  
Financial Reporting ◽  
Academic Research ◽  
Accounting Standards ◽  
Income Taxes ◽  
Financial Accounting ◽  
Financial Statement ◽  
Management Approach ◽  
International Accounting Standards ◽  
Financial Accounting Standards Board ◽  
Discussion Paper

SYNOPSIS: The Financial Accounting Standards Board and the International Accounting Standards Board (hereafter, the Boards) issued the discussion paper Preliminary Views on Financial Statement Presentation in late 2008. The Boards propose to significantly reconfigure the presentation of financial statements to offer parallel statements with standardized partitions of each financial statement into five categories: business activities, financing activities, income taxes, discontinued operations, and equity. The allocation of transactions within these partitions will depend crucially on management’s assessment of each transaction (i.e., the management approach). In this paper we comment on the proposal, with particular emphasis on empirical evidence and relevant theories from academic research. We highlight benefits of the proposed changes as well as some possible concerns. We conclude that the objective of providing a cohesive picture of activities through a uniform standardization of each financial statement by activity is desirable, but the proposed criteria for how activities are categorized results in potentially aberrant or confusing outcomes. Thus, any dissatisfaction with the current financial statement format may be replaced with other criticisms. Finally, the current proposal relies on the effectiveness of the management approach, which can only be successful if managers embrace the proposed structure.

scholarly journals Distortions in the measurement of the efficiency of financial leverage strategies in the airline industry when operating leases are ignored

2014 ◽  
Vol 25 (1) ◽  
pp. 21-36
Author(s):  
Carl A Sheraga ◽  
Paul Caster
Keyword(s):  
Airline Industry ◽  
Balance Sheet ◽  
Accounting Standards ◽  
Financial Accounting ◽  
International Accounting Standards ◽  
Financial Accounting Standards Board ◽  
Financial Leverage ◽  
Balance Sheets ◽  
Operating Leases ◽  
Management Perspective

The Financial Accounting Standards Board and the International Accounting Standards Board have set forth a proposal requiring companies to capitalize operating leases and include them as assets and liabilities on their balance sheets. The proposal is motivated by the fact that current methods accounting for operating leases hide a great deal of off-book leverage and thus are misleading to investors. Such a change would have a significant impact on the U.S. airline industry where aircraft and property operating leases are quite prevalent. This study utilizes an in-depth strategic management perspective in examining how well U.S. airlines pursue optimization strategies with regard to the management of financial leverage in order to achieve desired targets of growth and profitability. Such benchmarking is accomplished by utilizing the DEA model suggested by Capobianco and Fernandes (2004). This study demonstrates the distortion inherent in inter-airline benchmarking when operating leases are not capitalized on the balance sheet.

scholarly journals What The CPAs Think About The Proposed Financial Statement Presentation

2011 ◽  
Vol 7 (11) ◽  
Author(s):  
Stuart Shough
Keyword(s):  
Accounting Standards ◽  
Financial Accounting ◽  
Financial Statement ◽  
International Accounting ◽  
International Accounting Standards ◽  
Financial Accounting Standards Board ◽  
Discussion Paper ◽  
International Accounting Standards Board

The Financial Accounting Standards Board and the International Accounting Standards Board jointly issued a Discussion Paper soliciting comments on a proposed financial statement presentation. This paper presents the results from 605 CPA’s responses to selected questions asked in the Discussion Paper.

scholarly journals What The CPA's Think About The Proposed Changes To Lease Accounting

2010 ◽  
Vol 8 (9) ◽  
Author(s):  
Stuart Shough
Keyword(s):  
Accounting Standards ◽  
Financial Accounting ◽  
International Accounting ◽  
International Accounting Standards ◽  
Financial Accounting Standards Board ◽  
Discussion Paper ◽  
Lease Accounting ◽  
International Accounting Standards Board

The Financial Accounting Standards Board and the International Accounting Standards Board jointly issued a Discussion Paper soliciting comments on a proposed standard on leases. This paper presents the results from 417 CPA’s responses to selected questions asked in the Discussion Paper.

Sign in / Sign up

Export Citation Format

Share Document