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Posts Tagged ‘Leases’

Three topics are hitting the accounting news sites.  I’m just passing along announcements.

IFRS

Work Plan for the Consideration of IncorporatingInternational Financial Reporting Standards into the Financial Reporting System for U.S. Issuers:  Exploring a Possible Method of Incorporation

A Securities and Exchange Commission Staff Paper

May 26, 2011

I will be commenting on this next week.  In the meantime, read the FEIblog summary here.


Leases

The FASB and IASB have been working on leases.  The accounting for leases has been a problem area for many, many, many years.  I’ve not commented on it yet.  With the current proposal, neither corporations (and their paid auditors) nor investors are happy with the proposed rule.  The latest change is a prime example of why the IASB will not produce US-useful accounting numbers.

Edith Orenstein at the FEI Blog has a good write-up on the latest, “Preparers Concerned About Change In Direction In FASB, IASB Leasing Proposal.”


# Shareholders to Become SEC Reporting Registrant

Jim Hamilton’s World of Securities Regulation, one of my most trusted and useful news sources, has a new piece out, “House Legislation Would Raise 500-Shareholder Threshold for Reporting Against Backdrop of SEC Review of the Trigger.”  I’ve been wanting to write on this issue for some time.  The Jim Hamilton Blog reports that new legislation has been proposed, increasing the number of shareholders required for enhanced disclosures from 500 to 2,000 shareholders of record.  This will be useful to many large companies, such as Facebook, to ignore the light of the public eye.  This proposed legislation is corporation friendly and investor unfriendly.

Debit and credit – – David Albrecht

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Am I going overboard?  I hope not, hate getting wet.  Let’s see what Dennis Beresford, former chairman of the FASB and current accounting professor, has to say about my previous post.  Denny is quoted from AECM, the international listserv for accounting professors.  On Thursday, November 27, 2008, he says:

Dennis Beresford, former Chairman of FASB, now accounting professor at University of Georgia

Dennis Beresford, former Chairman of FASB, now accounting professor at University of Georgia

Last year I had Julie Erhardt speak to my graduate accounting classes and meet with some of our accounting faculty. Julie is the SEC Deputy Chief Accountant in charge of all of the international accounting effort. One of the faculty members asked about how we could teach IFRS on top of U.S. GAAP. Julie gave what I thought was a very interesting and insightful response.

Julie said that perhaps we could change our approach to financial accounting to one in which most of the focus in the first place was on business issues.  For example, if covering lease accounting, the instruction could begin with the differences between buying and leasing an asset, what are the economics of doing one vs. the other, and what would be the effects on financial statements of capitalizing leases vs. expensing lease payments as they are incurred.  Then the coverage could move on to the fundamental principles that determine whether leases should be capitalized or not e.g., how much of the fair value is covered by lease payments. Only after the economic issues and the basic principles are covered would some of the details (e.g., what to do with contingent rentals) that distinguish IFRS from GAAP be mentioned. In this approach, about 50% of the effort would be on the economics, 25% would be on the principles (that ought be to pretty similar), and 25% on the rules (that could be different).

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