Accounting for Leases

The International Accounting Standards Board (responsible for IFRS) and the Financial Accounting Standards Board (responsible for US GAAP) (“the Boards”) are working on a joint project to revise the accounting for operating leases. In their initial exposure draft, the Boards recognised the ‘right-of-use model’.

Keywords: Mazars, Thailand, Accounting, Leases, IFRS, IASB, FAS, US GAAP

07 May 2013

The Boards tentatively decided to confirm the right–of-use model for operating lease arrangements for lessees, except for short-term leases. Under the right–of-use model, a lessee would recognise a right-of-use asset representing its right to use an underlying asset during the lease term and recognise a liability for the related lease payments.

The revised policy would replace the current policy for accounting for operating leases, in which the lessees recognise lease payments as expenses. In recording an asset and related liability, the revised policy for operating parallels the accounting policy for finance leases; however, the determination of amounts to capitalize and related liability would differ.

The Boards intend to publish a revised exposure draft in the second quarter of 2013, with a 120-day comment period.

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