Monday, August 16, 2010
Exposure Draft imminent; live webcast discussion August 18
The IASB has scheduled a live webcast on August 18 to present the Exposure Draft of the new lease accounting standard. The webcast will include a Q&A time. They're holding the same event twice, to have it at times that are reasonable in more time zones: 10:30 am & 3:30 pm London time, which is 5:30 am & 10:30 am Eastern Daylight Time in the U.S. You may register for either at the IASB web site. I presume the Exposure Draft itself will be out before the webcast, but I see no sign that it has yet been released.
Friday, July 30, 2010
Final decisions before the Exposure Draft
At the FASB & IASB meetings July 19, 21, and 22, the boards reached the following decisions for the new lease accounting standard:
Scope & sale/leaseback accounting
Previously, the boards had set several criteria that would indicate a transaction should be considered a sale/purchase rather than a lease. These had the effect of converting many currently capital leases into purchases. The boards have now retreated somewhat from that position, by removing two criteria:
1. The contract covers the whole of the expected useful life of the asset.
2. The contract specifies a fixed return to the transferor.
The boards reaffirmed treatment as a purchase/sale if, at the end of the contract, control of the underlying asset and all but a trivial amount of the risks and benefits associated with that asset are transferred to the recipient. This requirement must be met for sale/leaseback accounting to be permitted.
Lessor accounting: performance obligation vs. derecognition
A lessor that retains exposure to significant risks and benefits associated with the underlying asset should apply the performance obligation approach; if no significant exposure remains, the derecognition approach is to be used. The risks and benefits may be during the expected term, or subsequent to the term (such as the expectation of re-leasing or selling the asset). Counterparty credit risk is not to be considered. The assessment is to be made at the beginning of the lease and not subsequently reassessed.
Risks & benefits during the lease term include: significant contingent rentals based on use or performance of the underlying asset, options to extend or terminate, and material nondistinct services provided. Risks & benefits subsequent to the lease contract include: whether the lease term is short in relation to the useful life of the asset, and whether a significant change in the value of the asset is expected (including the effect of .
In deciding which approach to use, a lessor must include third-party residual guarantees in determining whether the lessor is exposed to significant risks and benefits. (It had been suggested that these should be considered as insurance contracts separate from the lease agreement and not affecting the approach decision; this is now discarded.)
Lessor accounting: leases with service components
The boards disagreed. The majority of the FASB thought that nondistinct services should not be bifurcated from the lease component under derecognition. The majority of the IASB took the opposite view, with the service element to be accounted for in accordance with the new revenue recognition standard. The FASB majority thought that if bifurcation was done, the service element should give rise to a receivable and performance obligation. Presumably both approaches will be presented in the upcoming Exposure Draft.
Exposure draft release
The boards plan to release the Exposure Draft of the proposed new lease accounting standard during the week of August 9. This will restate, in the form of a standard, the various decisions that they've made over the last 9 months. Anyone is invited to submit a comment letter for the boards to review. Some decisions clearly remain to be made, since the boards have disagreed on a few issues, and they're trying to reach a converged standard. And everything so far is couched as "tentatively decided," so in theory everything is subject to alteration. Realistically, though, it is unlikely that the broad outlines of the new standard, particularly placing all leases on the balance sheet, will change.
Scope & sale/leaseback accounting
Previously, the boards had set several criteria that would indicate a transaction should be considered a sale/purchase rather than a lease. These had the effect of converting many currently capital leases into purchases. The boards have now retreated somewhat from that position, by removing two criteria:
1. The contract covers the whole of the expected useful life of the asset.
2. The contract specifies a fixed return to the transferor.
The boards reaffirmed treatment as a purchase/sale if, at the end of the contract, control of the underlying asset and all but a trivial amount of the risks and benefits associated with that asset are transferred to the recipient. This requirement must be met for sale/leaseback accounting to be permitted.
Lessor accounting: performance obligation vs. derecognition
A lessor that retains exposure to significant risks and benefits associated with the underlying asset should apply the performance obligation approach; if no significant exposure remains, the derecognition approach is to be used. The risks and benefits may be during the expected term, or subsequent to the term (such as the expectation of re-leasing or selling the asset). Counterparty credit risk is not to be considered. The assessment is to be made at the beginning of the lease and not subsequently reassessed.
Risks & benefits during the lease term include: significant contingent rentals based on use or performance of the underlying asset, options to extend or terminate, and material nondistinct services provided. Risks & benefits subsequent to the lease contract include: whether the lease term is short in relation to the useful life of the asset, and whether a significant change in the value of the asset is expected (including the effect of .
In deciding which approach to use, a lessor must include third-party residual guarantees in determining whether the lessor is exposed to significant risks and benefits. (It had been suggested that these should be considered as insurance contracts separate from the lease agreement and not affecting the approach decision; this is now discarded.)
Lessor accounting: leases with service components
The boards disagreed. The majority of the FASB thought that nondistinct services should not be bifurcated from the lease component under derecognition. The majority of the IASB took the opposite view, with the service element to be accounted for in accordance with the new revenue recognition standard. The FASB majority thought that if bifurcation was done, the service element should give rise to a receivable and performance obligation. Presumably both approaches will be presented in the upcoming Exposure Draft.
Exposure draft release
The boards plan to release the Exposure Draft of the proposed new lease accounting standard during the week of August 9. This will restate, in the form of a standard, the various decisions that they've made over the last 9 months. Anyone is invited to submit a comment letter for the boards to review. Some decisions clearly remain to be made, since the boards have disagreed on a few issues, and they're trying to reach a converged standard. And everything so far is couched as "tentatively decided," so in theory everything is subject to alteration. Realistically, though, it is unlikely that the broad outlines of the new standard, particularly placing all leases on the balance sheet, will change.
Friday, June 25, 2010
Leases in business acquisitions
Under FAS 13, if a business acquires another business that has capital leases, the lease is re-evaluated. The present value of the rents is the new obligation, while the asset is booked at fair value, which may be a different amount.
The FASB has decided, in a June 23 meeting, that this will no longer be the case. Instead, under the new lease accounting standard, an acquirer will account for the lease as if it were a new lease starting on the day of acquisition, and otherwise account for it as any other lease.
A rare win for simplification as part of the lease accounting revision...
The FASB has decided, in a June 23 meeting, that this will no longer be the case. Instead, under the new lease accounting standard, an acquirer will account for the lease as if it were a new lease starting on the day of acquisition, and otherwise account for it as any other lease.
A rare win for simplification as part of the lease accounting revision...
Derecognition over performance obligation (sometimes)
The FASB & IASB, in meetings June 16 & 17, decided to partially pull back from the concept of a performance obligation for lessors in the new lease accounting standard. They have now decided to use that approach (where the original leased assets remains on the lessor's books untouched, and a matching receivable debit and performance obligation credit are set up for the lessor lease, with the receivable amortized using the interest method and the performance obligation amortized straight-line) only for leases "that expose the lessor to significant risks and benefits associated with the underlying asset." In other cases, a derecognition approach is to be used: Once the receivable is calculated for the lessor lease, the owned asset is credited for that amount. The IASB staff commented that this is similar to the current distinction between operating and capital leases (wasn't the goal of the new standard to get away from that?).
The vote was actually split between the boards, with the IASB in favor of this hybrid approach, while a majority of the FASB prefers performance obligations for all leases. However, the FASB Action Alert summary states that "the Boards" decided on the hybrid approach, which suggests that in the interests of convergence, either the IASB has priority or the vote is being tallied in total. I don't know enough about the workings of the convergence project to clarify that.
Other topics covered:
Lessor transition under a derecognition approach
The boards have decided that lessors should recognize a lease receivable at the present value of the remaining lease paymentss, and a residual asset at fair value. The present value is based on the implicit rate at lease inception, but it looks like that includes the residual asset at its current, not original, estimate of future value.
Leases with a service component, lessor derecognition
The boards were unable to come to a conclusion for how to account for leases that include a service component (what is called executory costs under the current leasing standards), when the services and leases are not distinct, for a lessor lease involving derecognition. This will be discussed further in July.
Purchase options
Purchase options are to be accounted for only upon exercise (aside from bargain purchase options, which immediately turn it into an in-substance purchase). This applies to both lessees and lessors.
Retirement of IASB members
Gilbert Gelard, Robert Garnett, and James Leisenring are retiring from the IASB as of June 30. Jim Leisenring has been a particularly forceful voice on the board. He's a former member of the FASB as well, and does not hesitate to make his views known. The impact of the change in personnel remains to be seen.
The vote was actually split between the boards, with the IASB in favor of this hybrid approach, while a majority of the FASB prefers performance obligations for all leases. However, the FASB Action Alert summary states that "the Boards" decided on the hybrid approach, which suggests that in the interests of convergence, either the IASB has priority or the vote is being tallied in total. I don't know enough about the workings of the convergence project to clarify that.
Other topics covered:
Lessor transition under a derecognition approach
The boards have decided that lessors should recognize a lease receivable at the present value of the remaining lease paymentss, and a residual asset at fair value. The present value is based on the implicit rate at lease inception, but it looks like that includes the residual asset at its current, not original, estimate of future value.
Leases with a service component, lessor derecognition
The boards were unable to come to a conclusion for how to account for leases that include a service component (what is called executory costs under the current leasing standards), when the services and leases are not distinct, for a lessor lease involving derecognition. This will be discussed further in July.
Purchase options
Purchase options are to be accounted for only upon exercise (aside from bargain purchase options, which immediately turn it into an in-substance purchase). This applies to both lessees and lessors.
Retirement of IASB members
Gilbert Gelard, Robert Garnett, and James Leisenring are retiring from the IASB as of June 30. Jim Leisenring has been a particularly forceful voice on the board. He's a former member of the FASB as well, and does not hesitate to make his views known. The impact of the change in personnel remains to be seen.
Friday, June 18, 2010
EZ13 v3.0 released!
FCS is delighted to announce the release of v3.0 of EZ13, our lease accounting software for lessees and lessors. EZ13 has always provided complete FAS-13-compliant accounting for both operating and capital leases. Some of the significant new features include:
* Notice dates: EZ13 can remind you that rents are changing, leases are expiring, or events that you've entered are coming up. You specify how many days before and after the event you want to be notified. When you've dealt with the matter, you can turn off display of that item without deleting the event.
* Multiple contingent rent types: You can now track up to 7 different types of contingent rent, each with their own account numbers for G/L entry. Two types are user-defined, so you can give them the meaning most relevant to your business.
* Purge leases: You may remove from a database leases that have terminated as of a date you specify. Optionally, these leases can be copied to another database.
* Copy leases to new database: You may copy any number of leases to a new database. This can be useful for testing changes to a lease without affecting your production database.
There are a number of other, less significant features, enhancing flexibility and usability. And of course, bug fixes.
More details about the full range of features EZ13 offers are available at http://www.ez13.com/ez13.htm.
You can download a trial of EZ13 v3.0, either lessee or lessor version, at http://www.ez13.com/download.htm. If you have any questions about how EZ13 can solve your lease accounting needs, please contact me by email or (203) 652-1375.
* Notice dates: EZ13 can remind you that rents are changing, leases are expiring, or events that you've entered are coming up. You specify how many days before and after the event you want to be notified. When you've dealt with the matter, you can turn off display of that item without deleting the event.
* Multiple contingent rent types: You can now track up to 7 different types of contingent rent, each with their own account numbers for G/L entry. Two types are user-defined, so you can give them the meaning most relevant to your business.
* Purge leases: You may remove from a database leases that have terminated as of a date you specify. Optionally, these leases can be copied to another database.* Copy leases to new database: You may copy any number of leases to a new database. This can be useful for testing changes to a lease without affecting your production database.
There are a number of other, less significant features, enhancing flexibility and usability. And of course, bug fixes.
More details about the full range of features EZ13 offers are available at http://www.ez13.com/ez13.htm.
You can download a trial of EZ13 v3.0, either lessee or lessor version, at http://www.ez13.com/download.htm. If you have any questions about how EZ13 can solve your lease accounting needs, please contact me by email or (203) 652-1375.
Friday, May 21, 2010
Performance obligation or derecognition—or both?
The FASB & IASB, at meetings May 18 & 19, revisited one of the fundamental decisions on lessor accounting made last year. As the staff’s agenda paper put it then, “What is the credit?” Setting up a capital lessor lease means setting up a receivable for the rent income stream. That’s a debit on the balance sheet. How should the balancing credit be characterized?
The boards considered two basic approaches. The first, which is the current methodology under FAS 13 and IAS 17, is derecognition: the owned asset is credited (reduced/eliminated). Under present accounting, the entire asset is derecognized, replaced by the receivable. Things get more complicated in the proposed new system, since many leases will be for only part of the value of the underlying asset. Crediting the asset would leave part of the owned asset on the books. More problematic is that multiple leases of a single asset could result in a sum total of receivables that is greater than the original asset value; how is that to be handled?
The solution the boards came up with was to create the concept of a performance obligation, representing the requirement to make the asset available to the lessee. This is a credit entry that is amortized over the life of the lease, based on passage of time or usage of the asset.
There have been rumblings for several months that several members of the boards are uncomfortable with the performance obligation methodology. Recent notes on lessor accounting have included explicit comment that decisions are “under the performance obligation approach.” At this week’s meetings, there was extensive discussion of going back to a derecognition approach, though this would be a “partial derecognition” approach. Described in detail in the agenda papers for the meetings, this means that the owned asset wouldn’t be completely taken off the books (unless the lease is for the entire useful life of the asset). A portion of the asset would be removed and replaced with the receivable.
The boards made decisions on how to account for various aspects of lessor activity under a partial derecognition approach, without committing to such an approach. You can read the full list of decisions in the FASB Action Alert. I’m not going to repeat all of it because it’s not clear if it will actually take effect, and I’d just be restating what they state there.
One significant implication of a partial derecognition approach is that a lessor could recognize a profit at the beginning of the lease (as is currently done with sales-type capital lessor accounting). The boards' prior decisions on lessor accounting with a performance obligation did not permit an up-front recognition of profit; instead, all income is to be recognized in the form of interest over the life of the lease. This has potentially a major impact on the reported profitability of manufacturers who lease their equipment. One can expect that they will lobby hard for a derecognition approach.
Conceptually, a derecognition approach seems to the staff to be more consistent with the lessee right-of-use approach. However, the unguaranteed residual value becomes much more significant in this approach, which can increase complexity.
The boards haven’t concluded which way to go, and significantly, there’s a difference of opinions between the boards. The FASB prefers to stick with the performance obligation methodology; the IASB prefers a hybrid model, using a performance obligation in some cases and derecognition in others. (The FASB Action Alert summary doesn't list the vote, but based on prior activity, I doubt it was unanimous with either board.) They’ve asked their staff to develop proposals to decide when to apply which model. But won’t that inevitably result in structuring opportunities, and similar transactions being accounted for differently? Eliminating that was supposed to be one of the big improvements of a new lease accounting standard. Will the two boards find a way to resolve the disagreement and keep a converged standard?
Stay tuned for more developments next month.
The boards considered two basic approaches. The first, which is the current methodology under FAS 13 and IAS 17, is derecognition: the owned asset is credited (reduced/eliminated). Under present accounting, the entire asset is derecognized, replaced by the receivable. Things get more complicated in the proposed new system, since many leases will be for only part of the value of the underlying asset. Crediting the asset would leave part of the owned asset on the books. More problematic is that multiple leases of a single asset could result in a sum total of receivables that is greater than the original asset value; how is that to be handled?
The solution the boards came up with was to create the concept of a performance obligation, representing the requirement to make the asset available to the lessee. This is a credit entry that is amortized over the life of the lease, based on passage of time or usage of the asset.
There have been rumblings for several months that several members of the boards are uncomfortable with the performance obligation methodology. Recent notes on lessor accounting have included explicit comment that decisions are “under the performance obligation approach.” At this week’s meetings, there was extensive discussion of going back to a derecognition approach, though this would be a “partial derecognition” approach. Described in detail in the agenda papers for the meetings, this means that the owned asset wouldn’t be completely taken off the books (unless the lease is for the entire useful life of the asset). A portion of the asset would be removed and replaced with the receivable.
The boards made decisions on how to account for various aspects of lessor activity under a partial derecognition approach, without committing to such an approach. You can read the full list of decisions in the FASB Action Alert. I’m not going to repeat all of it because it’s not clear if it will actually take effect, and I’d just be restating what they state there.
One significant implication of a partial derecognition approach is that a lessor could recognize a profit at the beginning of the lease (as is currently done with sales-type capital lessor accounting). The boards' prior decisions on lessor accounting with a performance obligation did not permit an up-front recognition of profit; instead, all income is to be recognized in the form of interest over the life of the lease. This has potentially a major impact on the reported profitability of manufacturers who lease their equipment. One can expect that they will lobby hard for a derecognition approach.
Conceptually, a derecognition approach seems to the staff to be more consistent with the lessee right-of-use approach. However, the unguaranteed residual value becomes much more significant in this approach, which can increase complexity.
The boards haven’t concluded which way to go, and significantly, there’s a difference of opinions between the boards. The FASB prefers to stick with the performance obligation methodology; the IASB prefers a hybrid model, using a performance obligation in some cases and derecognition in others. (The FASB Action Alert summary doesn't list the vote, but based on prior activity, I doubt it was unanimous with either board.) They’ve asked their staff to develop proposals to decide when to apply which model. But won’t that inevitably result in structuring opportunities, and similar transactions being accounted for differently? Eliminating that was supposed to be one of the big improvements of a new lease accounting standard. Will the two boards find a way to resolve the disagreement and keep a converged standard?
Stay tuned for more developments next month.
Tuesday, May 18, 2010
April meeting results
The FASB & IASB met again in mid-April for multiple meetings regarding the new lease accounting standard (originally supposed to be a joint meeting in London, the Icelandic volcano forced it to be a videoconference). Lessee topics included sale/leaseback transactions and rent presentation; subleasing was also discussed. Topics for lessors included: performance obligation amortization, impairment, purchase options, and disclosure requirements. Long-term leases of land affect both lessees and lessors.
Sale and leaseback transactions
Under current US GAAP, a sale and leaseback is recognized as such only if it meets criteria specified in FAS 98, which particularly prohibit “continuing involvement” by the seller-lessee in the property other than the leaseback itself. If there is continuing involvement, such as a fixed-price purchase option, nonrecourse financing, or a guaranteed residual, sale/leaseback accounting is prohibited and the transaction must be accounted for as a financing, with the asset remaining on the “seller’s” books.
The boards have decided to tie the definition of a qualifying transaction to their previous decision to account for a lease as a sale of the underlying asset. The relevant definition is “if at the end of the contract control of the underlying asset has been transferred and all but a trivial amount of the risks and benefits associated with the underlying asset have been transferred.” The interesting thing about use of this definition is that in this case, it’s being used to define the sale portion of the transaction, not the lease portion. The impact of the decision should be minimal; that is, generally transactions will get the same treatment (as far as whether they’re treated as sale/leaseback or as financing) under the new standard as the old, but it makes sense to use more consistent definitions within the new standard.
Lessee presentation of total cash rentals paid
Currently, cash rent paid under operating leases is a line item in the income statement; it is not, however, an income statement for capital leases (since the expenses recognized are interest and depreciation). The new standard includes a disclosure with a reconciliation of obligation to pay rentals, along with reporting interest and obligation repayments (separately) in the statement of cash flows; no separate presentation of total rent paid is to be included.
Subleases
As one might expect, a sublease is treated like a lessor lease by the intermediate party. Assets and liabilities for subleases will be reported gross with a net subtotal, separate from the assets and liabilities related to the head lease (the original lease of the asset that is being subleased).
Long-term leases of land
There had been some discussion of possibly treating long-term leases of land as sales (in some countries, land leases of 99 or even 999 years are common due to cultural or legal barriers to actual transfer of land ownership). The boards decided not to go that route; long-term land leases will be treated like any other lease within the new standard.
Lessor performance obligation amortization
Amortization should be in a systematic and rational manner based on the pattern of use of the underlying asset. This could be passage of time, hours of use or items produced for equipment, etc.
The boards have not decided whether or how to permit revenue recognition at the start of a lease (similar to current sales-type lessor lease accounting), and asked the staff to further analyze the issue.
Lessor accounting for purchase options
Purchase options are to be accounted for the same way as renewal and termination options, using the “more likely than not” criterion for exercise.
Lessor accounting for impairment of assets
The receivable is to be reviewed first for impairment, with an adjustment to both the receivable and the performance obligation and any difference being recorded in profit or loss. The underlying asset is also subject to impairment review; the staffs are to further consider how to apply IFRS 36 and ASC Topic 360, each board’s impairment standard.
Lessor disclosures
Descriptive
The nature of the lease arrangement(s), if leasing is a significant part of the lessor’s business activities
Restrictions placed on leased assets by the leases
Existence and terms of any residual value guarantees
Under IFRS: Information on risks surrounding the receivable (cf. IFRS 7)
Under US GAAP: Information on credit quality, the uncertainty of future cash flows, and how the lessor manages those uncertainties
Notation if simplified short-term lease accounting is being used
Quantitative
Maturity analysis, by year for five years and future years as a lump sum, showing the minimum contractual receivables and total estimated receivable
Maturity analysis, by year for three years and future years as a lump sum, of the satisfaction of performance obligations
Reconciliation between opening and closing balances for the receivable and performance obligation, showing the transactions resulting in increases and decreases
If simplified short-term accounting is being used, the gross amount so recognized
The FASB meeting notes indicate that the boards now anticipate a release of the exposure draft in August 2010, rather than the previously planned June. Obviously there’s too much yet to be completed.
This week (May 18 & 19), the boards have scheduled over 7 hours of meeting time to discuss a lessor’s accounting for the performance obligation and the alternative approach of derecognition (i.e., rather than keeping the leased asset on the books and setting up a performance obligation, the lessor would reduce reported owned assets by the amount of the lease receivable).
Sale and leaseback transactions
Under current US GAAP, a sale and leaseback is recognized as such only if it meets criteria specified in FAS 98, which particularly prohibit “continuing involvement” by the seller-lessee in the property other than the leaseback itself. If there is continuing involvement, such as a fixed-price purchase option, nonrecourse financing, or a guaranteed residual, sale/leaseback accounting is prohibited and the transaction must be accounted for as a financing, with the asset remaining on the “seller’s” books.
The boards have decided to tie the definition of a qualifying transaction to their previous decision to account for a lease as a sale of the underlying asset. The relevant definition is “if at the end of the contract control of the underlying asset has been transferred and all but a trivial amount of the risks and benefits associated with the underlying asset have been transferred.” The interesting thing about use of this definition is that in this case, it’s being used to define the sale portion of the transaction, not the lease portion. The impact of the decision should be minimal; that is, generally transactions will get the same treatment (as far as whether they’re treated as sale/leaseback or as financing) under the new standard as the old, but it makes sense to use more consistent definitions within the new standard.
Lessee presentation of total cash rentals paid
Currently, cash rent paid under operating leases is a line item in the income statement; it is not, however, an income statement for capital leases (since the expenses recognized are interest and depreciation). The new standard includes a disclosure with a reconciliation of obligation to pay rentals, along with reporting interest and obligation repayments (separately) in the statement of cash flows; no separate presentation of total rent paid is to be included.
Subleases
As one might expect, a sublease is treated like a lessor lease by the intermediate party. Assets and liabilities for subleases will be reported gross with a net subtotal, separate from the assets and liabilities related to the head lease (the original lease of the asset that is being subleased).
Long-term leases of land
There had been some discussion of possibly treating long-term leases of land as sales (in some countries, land leases of 99 or even 999 years are common due to cultural or legal barriers to actual transfer of land ownership). The boards decided not to go that route; long-term land leases will be treated like any other lease within the new standard.
Lessor performance obligation amortization
Amortization should be in a systematic and rational manner based on the pattern of use of the underlying asset. This could be passage of time, hours of use or items produced for equipment, etc.
The boards have not decided whether or how to permit revenue recognition at the start of a lease (similar to current sales-type lessor lease accounting), and asked the staff to further analyze the issue.
Lessor accounting for purchase options
Purchase options are to be accounted for the same way as renewal and termination options, using the “more likely than not” criterion for exercise.
Lessor accounting for impairment of assets
The receivable is to be reviewed first for impairment, with an adjustment to both the receivable and the performance obligation and any difference being recorded in profit or loss. The underlying asset is also subject to impairment review; the staffs are to further consider how to apply IFRS 36 and ASC Topic 360, each board’s impairment standard.
Lessor disclosures
Descriptive
The nature of the lease arrangement(s), if leasing is a significant part of the lessor’s business activities
Restrictions placed on leased assets by the leases
Existence and terms of any residual value guarantees
Under IFRS: Information on risks surrounding the receivable (cf. IFRS 7)
Under US GAAP: Information on credit quality, the uncertainty of future cash flows, and how the lessor manages those uncertainties
Notation if simplified short-term lease accounting is being used
Quantitative
Maturity analysis, by year for five years and future years as a lump sum, showing the minimum contractual receivables and total estimated receivable
Maturity analysis, by year for three years and future years as a lump sum, of the satisfaction of performance obligations
Reconciliation between opening and closing balances for the receivable and performance obligation, showing the transactions resulting in increases and decreases
If simplified short-term accounting is being used, the gross amount so recognized
The FASB meeting notes indicate that the boards now anticipate a release of the exposure draft in August 2010, rather than the previously planned June. Obviously there’s too much yet to be completed.
This week (May 18 & 19), the boards have scheduled over 7 hours of meeting time to discuss a lessor’s accounting for the performance obligation and the alternative approach of derecognition (i.e., rather than keeping the leased asset on the books and setting up a performance obligation, the lessor would reduce reported owned assets by the amount of the lease receivable).
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