NEWS: IASB and FASB Agree on Lease Accounting Approach
From Oracle’s PeopleSoft Apps Strategy blog:
Almost a year after their decision to re-expose proposals for a common leasing standard, the International Accounting Standards Board (IASB) and the Financial Accounting Standards Board (FASB) have reached a key decision regarding the recognition of lease expenses. At their June 13, 2012 meeting, the IASB and FASB agreed that leases over 12 months should be recognized on the balance sheet, while leases with terms under 12 months should be treated similar to current operating leases.
With that major decision in place, the timeline for issuance of the final standard seems to be a bit more stabilized. The IASB and FASB expect to publish the second exposure draft in the fourth quarter of this year, and issue the final lease accounting guidance late in 2013. It is anticipated that the new lease accounting standard will be effective in 2017, with retroactive reporting beginning in 2015.
Oracle remains committed to helping customers transition to the new lease accounting standard. The Applications Unlimited teams continue to work closely together to monitor the convergence project and analyze the impact to our products so that we can design and build consistent solutions.
We anticipate that the new lease accounting rules will introduce functional overlap between the two products primarily impacted by the lease convergence – PeopleSoft Asset Management and Real Estate Management, both part of the PeopleSoft Asset Lifecycle Management (ALM) suite of products. PeopleSoft plans to evaluate the lease administration features and functions of each product to deliver a foundational framework for the new capabilities the final accounting standard will require.
Good news: Oracle will be enhancing its PeopleSoft ALM suite of products to accommodate these new rules.
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