The following correspondence from Bill Bosco, regular Monitor contributor, discusses the IASB paper and its one lease lessee model:

“Fortunately, the FASB is maintaining its two lease model position, which meshes with the legal, tax and bank regulatory view of leases as current GAAP does. That is, there are two types of leases with significant differences and they need to be accounted for and presented differently for users to continue to have important information as to capital lease and operating lease assets and liabilities. Many preparers using the one lease model will have to keep two sets of records so the argument that the one lease model is simple is true only for the accounting, not the reporting of important information for key users like lenders, tax authorities and bank regulators. As one example, how can an IFRS bank get regulatory capital relief for ROU lease assets arising from executory lease contracts if they do not keep two sets of records? In my opinion the FASB approach is the lower cost/complexity and compliance-friendly approach.

Both models will meet the prime objective of the lease project to capitalize operating leases. It is likely that the FASB standard will capitalize more leases as the IASB is considering broadening exemptions for small ticket/non-core asset leases.”

For further reading, Bosco recommends the following articles:

IASB’s Decision Won’t Change FASB’s Plans for Leases Standard by Jason Bramwell, Accounting Web

IASB scraps dual lease accounting model by Richard Crump, Financial Director