The International Accounting Standards Board
(IASB) and the US Financial Accounting Standards Board (FASB) have
reached an agreement on lease accounting.

The standard setters agreed on an approach for
accounting for lease expenses as part of their project to revise
lease accounting in IFRSs and US GAAP. However, the boards have
said the decisions reached so far are ‘preliminary’ and the joint
exposure draft will be issued in the fourth quarter of this

The IASB and FASB began the leases project to
address the widespread concern that many lease obligations
currently are not recorded on the balance sheet and that the
current accounting for lease transactions does not represent the
economics of all lease transactions.

Previously the boards agreed that leases
should be recorded on the balance sheet, but continued to discuss
the classification and pattern of expenses in the income

The decision reached by the standard setters
this week is an approach in which some lease contracts would be
accounted for using an approach similar to that proposed in the
2010 Leases exposure draft and some leases would be accounted for
using an approach resulting in a straight-line lease expense.

“The boards carefully considered the diverse
views of stakeholders about whether the income statement profile of
all leases should be the same. On balance, we decided that
leases that convey a relatively small percentage of the life or
value of the leased asset should be recognised evenly over the
lease term,” FASB chairman Leslie Seidman said.

IASB chairman Hans Hoogervorst said once the
proposals have been issued for comment he expects the “important”
convergence project to be completed during 2013.