What’s driving the FASB/IASB Lease Accounting changes?

In 2006, the FASB and IASB set out to revise lease accounting standards with the aim of giving investors a more transparent view of companies’ leasing activities. A decade later, the resulting changes are intended to improve the accuracy of financial reporting about lease liabilities.

The previous lease accounting guidance had been criticized for allowing leased assets and, more importantly, obligations for future lease payments to be excluded from a company’s balance sheet. There was also concern about the manipulation of ‘bright-line’ thresholds that could lead to significantly different accounting for transactions that were basically similar.

The most significant driver for change, though, was the need to bring operating leases onto the balance sheet. Historically, they had always been treated as an ‘off-balance sheet’ obligation. Under the new guidance, financial statements should give investors and others a better understanding of a company’s financial soundness — thus enhancing their ability to make better investment decisions.

Dedicated to helping you meet the new US GAAP and IFRS Lease Accounting Standards, the Trimble Manhattan team has been thoughtful and deliberate in its development of the new Manhattan FASB/IASB functionality. 

To learn more, please visit 'Are you on the road to FASB/IASB compliance?

 

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