answer the following questions: 1.) Why did the FASB and IASB set out on the joi

Question

answer the following questions:

1.) Why did the FASB and IASB set out on the joint project to issue a new lease standard?

2.) What are some of the criticisms of the old lease standard for both GAAP and IFRS? (Was the main complaint regarding lessor or lessee accounting?)

3.) What is the main difference of the previous GAAP Topic 840/IAS 17 and the new lease guidance Topic 842/IFRS 16? (Note: this new requirement is the same under GAAP and IFRS.)

4.) When will the amendments be effective for a public company using GAAP? Can a public company choose to adopt the new standard early?

5.) While many of the requirements are the same for Topic 842 and IFRS 16, some differences still remain and the standard is not converged. What is the main difference between Topic 842 and IFRS 16?

Good grammar, spelling and punctuation will be considered in grading. You should use paragraph form.

Explanation / Answer

The Financial Accounting Standards Board (FASB) today issued an Accounting Standards Update (ASU) intended to improve financial reporting about leasing transactions. The ASU affects all companies and other organizations that lease assets such as real estate, airplanes, and manufacturing equipment.

The new guidance responds to requests from investors and other financial statement users for a more faithful representation of an organization’s leasing activities,”stated FASB Chair Russell G. Golden. It ends what the U.S. Securities and Exchange Commission and other stakeholders have identified as one of the largest forms of off-balance sheet accounting, while requiring more disclosures related to leasing transactions.

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