Review of the news in a chronological order

New leasing rules had been started to work on in 1996 but encountered to a strong
protest from leasing companies which debated that industry would be killed by the
change (Jones, 2016). After struggling for 10 years, IFRS 16 was finally added to the
IASBs agenda in July 2006 (Iasplus.com, n.d.).
On 19 March 2009, primary views were announced by IASB. This discussion paper
was about the introducing of a new possible model for accounting in lease. It
emphasized on the right to use those leased asset which was based on the foundation
that leases will increase liabilities for the assets and the future rental payments which
should be shown in the financial position of an entity as it will help to ensure that
leases are held constantly across the industries and sectors. This discussion paper
mostly dealt with the lessee accounting and for the lessor accounting, it just depicted
problems that will be needed to address in a future proposed standard (Iasplus.com,
n.d.).
On 17 August 2010, in order to enhance the lease financial reporting, IASB and FASB
had published the proposal for public to comment. In this first exposure draft, they
had added more details of the proposal which was aimed to bring a persistent
approach - the right of use approach to both lessors and lessees. As currently, lessees
need not record assets or liabilities in their financial position if it was an operating
lease, thus bringing trouble for investors to evaluate it. But with the right of use
approach, it will provide much more complete and beneficial information to the
investors and for the users of the financial statements as this approach was meant to
bring the result of increasing liability for the payments under the lease contract and to
include the right of using the underlying asset in the statement of financial position of
the lessee (Iasplus.com, n.d.).
While on 21 July 2011, both IASB and FASB had declared a plan to re-expose the
modified proposal for a general standard of leasing. Both of them stated that the
decisions till the date were adequately distinct from the one that was published in the
first exposure draft to warrant re-exposure of the modified proposals although the
boards had not taken all of their consideration yet. The plan of re-exposure was to
give another opportunity to the parties who were interested to review on revisions that

the boards had assured after the issuance of the initial proposal in August 2010
(Iasplus.com, n.d.).
IASB then published the highly anticipated accounting lease proposals on 16 May
2013. This second exposure draft highlighted for the measurement and recognition of
a lease, for lessors, there will only be small changes when recognising the revenue
and discounting the residual asset; while for lessees, recognising liabilities and the
right of use asset profit or loss impact was related to the lease classification. This was
due to the feedback from the first exposure draft that the lessee model had the front
loading of profit or loss issue (the results of profit or loss not showing useful
information) so the second exposure draft was aimed to mitigate this issue. For
lessors, feedback showed that useful information was reflected by the current model
to the users which has resulted in a reassessment of the symmetrical approach in the
2010 first exposure draft (Iasplus.com, n.d.).
Finally on 13 January 2013, the new leasing standard was issued by IASB, IFRS16
eliminates off balance sheet items for lessees under a single model, removing the
difference between finance and operating leases. While for lessor, there were not
much changes and the difference between finance and operating leases was preserved.
IAS 17 will be replaced by IFRS16 and is effective on 1 January 2019; companies are
allowed to apply IFRS16 earlier if only they had also applied IFRS15 Revenue from
Contracts with Customers (Iasplus.com, n.d.).

References:
Jones, H. (2016). New lease accounting rule aims at clearer view of company health.
[online]

Reuters

UK.

Available

at:

http://uk.reuters.com/article/uk-accounts-

regulations-leases-idUKKCN0UR00320160113 [Accessed 27 Oct. 2016].

Iasplus.com.

(n.d.).

IFRS

16

Leases.

[online]

Available

at:

http://www.iasplus.com/en/standards/ifrs/ifrs-16 [Accessed 27 Oct. 2016].

Iasplus.com. (n.d.). IASB publishes preliminary views on leases. [online] Available at:
http://www.iasplus.com/en/news/2009/March/news5100 [Accessed 27 Oct. 2016].
Iasplus.com. (n.d.). IASB and FASB publish proposals to improve the financial
reporting

of

leases.

[online]

Available

at:

http://www.iasplus.com/en/news/2010/August/news5540 [Accessed 28 Oct. 2016].

Iasplus.com. (n.d.). IASB and FASB announce re-exposure of lease accounting
proposals.

[online]

Available

at:

http://www.iasplus.com/en/news/2011/July/news6677 [Accessed 28 Oct. 2016].

Iasplus.com. (n.d.). IASB publishes highly anticipated lease accounting proposals.
[online] Available at: http://www.iasplus.com/en/news/2013/05/leasing-proposals
[Accessed 29 Oct. 2016].
Iasplus.com. (n.d.). IASB issues new leasing standard. [online] Available at:
http://www.iasplus.com/en/news/2016/01/ifrs-16 [Accessed 29 Oct. 2016].