There has been a major change in direction of the Financial Accounting Standards Board (FASB)/International Accounting Standards Board (IASB) lease accounting project. Because they want to complete lessee lease accounting changes by 2011 when U.S. companies may begin reporting under international accounting standards, the Boards decided at a joint meeting on April 17 to abandon their "clean slate" approach to writing the new lease accounting rules, due to that approach's slow progress. However, they maintain the philosophy that lease accounting should be based on lessors and lessees recognizing the rights and obligations in the contract.At further meetings in July, the Boards made several key decisions. Although they continue to use the phrase "right-of-use" to describe what a lease conveys and what should be accounted for, they opted to use International Accounting Standard (IAS) 17 as the base and amend it to cause lessees to capitalize leases that would have been operating leases under that standard. In addition they agreed to split the project and only take up lessee accounting in the lease accounting project. Lessor accounting will be dealt with in theory in their Revenue Recognition Project and then in detail in subsequent amendments to the lease accounting rules. They also want to use as much existing GAAP as possible and limit debate in the lessee project.
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