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The Daily

IASB/FASB Lease Standards May Require Delicate Balance for International Companies

Chris Gaetano
Published Date:
Jan 14, 2016
ScalesWhile the lease standards of the International Accounting Standards Board (IASB) and Financial Accounting Standards Board (FASB) are the same in most respects, the small differences between the two could prove to be a headache for international companies as they work to comply with both methods, according to CFO.com. The main issue is that the international standard follows a unitary leasing model, where all lease obligations are treated as financing or capital leases; by contrast, the FASB standard has a dual-model where there's type A leases (things like equipment and vehicles) and type B leases (things like real estate). This was a major sticking point when the two boards were trying to converge on a single standard, and ultimately was left unresolved, leaving them to end with similar, but not identical, standards. CFO.com, however, said that this difference means that companies will "have to perform calculations to align single-method subsidiaries with the dual-method approach." This might mean that companies may need to start keeping what would essentially be two sets of books, one for FASB and the other for IFRS, to deal with the issue, said CFO.com. While this is not the ultimate problem, according to CFO.com, it may still be a problem that finance departments will need to be cognizant of in the future.