The long promised second exposure draft (ED2) of the new lease accounting
standard is likely to be released in the coming weeks. The broad scope of the
changes has been clear for some months now, from the public re-deliberations of
the joint standard setting bodies (the International Accounting Standards Board
(IASB) and the US Financial Accounting Standards Board (FASB)), following the
original exposure draft (ED1) issued in 2010.
The most far reaching proposed change will be to require balance sheet
recognition by lessees of the obligations in leases currently classified as
off-balance-sheet operating leases. The most likely main effective date of the
changes will be January 1 2017 (although this will not be decided until the
standard is finalized). However, for may lessees in jurisdictions subject to
international financial reporting standards (IFRS) the timing of the change will
depend on a coming review by the IASB of a separate accounting standard for
small and medium sized enterprises (IFRS SMEs).
The first (and still current) version of IFRS SMEs was issued in 2009. Its
purpose is to permit a simplified and rather less
financial reporting, omitting some requirements that are felt less essential for
SMEs than for larger companies. In the case of lease accounting, in contrast
with some other areas, the principles of the existing IFRS accounting standard
IAS 17 are reflected in full within IFRS SMEs.
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