The attempt to find a single lease accounting model based on
recognition of a right-of-use asset has faltered. In this article,
two professionals in Grant Thornton LLP's National Professional
Standards Group suggest a control-based model as an
alternative.
The FASB and IASB (the Boards) are preparing to issue a second
exposure draft on lease accounting later this year or early next
year. This exposure draft is expected to include a second lease
accounting model in addition to the original model based on
recognition of a right-of-use asset. The right-of-use asset itself
isn't being rethought.
Some may attribute the addition of a second model to political
pressure or resistance to change on the part of preparers. Others
have noted a lack of consistency between the right-of-use asset
model and the control-based model for revenue recognition, despite
similarities in the economic substance of the transactions. We fall
into the latter group.
