{[ promptMessage ]}

Bookmark it

{[ promptMessage ]}

Blue Steele Lease Paper

Fasb and iasb proposed topic 840 which would

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
FASB and IASB proposed topic 840, which would establish a new accounting standard for leases. The new proposals would exclude leases on biological and intangible assets, exploring and use of natural resources, and some investment properties. (FASB, 2010) This new proposal has the potential to significantly change recognition of leases. First, the lessee would be required to recognize both assets and liabilities arising from lease agreements. The asset would disclose the right to use the leased assets while the liability would disclose the payment requirements. Another key change would be the measurement of the asset and liability due to the new proposal requiring them to account for options and contingent rentals. For the lessor the new proposal affects the way companies recognize the payments received for their leased asset. There are two methods, the performance obligation approach and the derecognition approach, that the lessor can choose from to meet this requirement. The performance obligation approach requires the company to recognize both a lease liability and an underlying asset. The derecognition approach says that companies should derecognize the rights to the underlying asset but recognize a residual asset for the rights the company has at the end of the lease terms. (FASB, 2010)
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Image of page 2
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}