In a major shake-up of lease accounting, the IASB and FASB have published proposals to bring most leases on-balance sheet for lessees. A dual model would apply, based on a new lease classification test, which would impact the profile of lease income or expense recognised over the lease term.
Implementing the proposals would be a real challenge for many companies. The impacts – including significant effort to identify leases and extract lease data, changes in financial metrics, and balance sheet volatility – would be felt across sectors.
Companies that lease high-value assets would see large increases in reported liabilities, while companies with large volumes of lower-value leases could face high implementation costs.
Comments are due to the IASB by 13 September 2013.
Download our In the Headlines to understand, at a high level, what the proposals mean for your business. In addition, our publication New on the Horizon brings you KPMG’s insight, helping you to better understand the proposals.