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20 December 2010

EFRAG commented on the IASBs ED on leases


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EFRAG published its final comment letter on the IFRS's Exposure Draft Leases. The draft proposes a comprehensive model for recognition and measurement for all lease transactions by lessors and lessees.


The proposals result in significant changes to the accounting requirements for both lessees and lessors. Leases are a very important class of transactions. However, accounting for leases has been criticised over the years, not least by users. Therefore, EFRAG supports the IASB's efforts to address the concerns, provided that the proposals offer an effective improvement over the existing requirements.
 
EFRAG has concerns about certain aspects of the proposals in the ED. In particular, EFRAG believes that the boundary between leases and service contracts is difficult to determine and supports a single partial derecognition model for lessors.
 
The other main concern relates to the inclusion in the measurement of lease assets and liabilities, of amounts payable under options to extend the lease and contingent rental agreements. 

Press release


© EFRAG - European Financial Reporting Advisory Group


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