ELFA Issues Joint Letter on Accounting for Lessors to IASB, FASB
ELFA and the global leasing industry have issued a Joint Letter on Accounting for Lessors to Leslie Seidman, acting chairman of the Financial Accounting Standards Board, and David Tweedie, chairman of the International Accounting Standards Board.The letter is signed by the Equipment Leasing and Finance Association (ELFA), Leaseurope (the European leasing and automotive rental federation), the Japanese Leasing Association (JLA), the China Leasing Business Association (CLBA), the Canadian Finance and Leasing Association (CFLA), the Australian Equipment Lessors Association (AELA), the Australian Fleet Lessors Association (AFLA) and the Truck Renting and Leasing Association (TRALA).
The joint letter explains that the global leasing industry has followed the Boards’ recent re-deliberations on the Leases project with great interest. In light of recent Board discussions, the industry wishes to reiterate its common views on lessor accounting before the Boards progress further in their re-deliberations on this topic.
The letter outlines the industry’s position on accounting for lessors as follows:
1. The de-recognition model, with accretion of residual assets, must be the general approach for lessor accounting. This will allow for manufacturing/sales profit recognition for manufacturer/dealer lessors, which we believe to be an entirely appropriate outcome.
2. The performance obligation model lacks conceptual grounding and fails to depict the economics of leases. It must be abandoned.
3. New guidance for lessors must be issued simultaneously with new guidance for lessees and be given full and proper consideration in order to achieve a high quality final standard.
Read the Global Leasing Industry Joint Letter on Accounting for Lessors.
For more information, visit the ELFA Lease Accounting page.
