Businesses Not in Favor of Lease Proposal

The proposal on financial reporting for leases faces significant opposition from businesses from around the globe, including U.S. retailer Dollar General, Delta Airlines and Swiss oil and gas offshore drilling contractor Noble Corp, according to a recent article in the Journal of Accountancy.

The proposal calls for lessees to report a straight-line lease expense in their income statement for most real estate leases. In most equipment and vehicle leases, lessees would recognize a lease as a nonfinancial asset measured at cost, less amortization. This would result in a total lease expense that generally would decrease over the lease term

The boards have expressed a desire to have a final standard in place by 2014, although implementation is not expected to occur earlier than fiscal years beginning Jan. 1, 2017.

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