Asked by Hallie Adair on May 20, 2024

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In May 2013,the FASB and the IASB issued a jointly developed leasing exposure draft which

A) Takes a property rights approach and would require lessees to record a "right-of-use" asset and the associated liability.
B) Takes a performance obligation approach for lessees and removes the asset from the balance sheet rather than establishing a lease liability.
C) Takes a derecognition approach for lessees and establishes a lease asset and a lease liability for the present value of the expected rental payments.
D) All of the choices are correct.

FASB

The Financial Accounting Standards Board, an independent organization responsible for establishing accounting and financial reporting standards in the US.

IASB

International Accounting Standards Board, the organization responsible for developing and publishing international financial reporting standards.

Right-Of-Use Asset

Right-of-use asset is a balance sheet item that represents a lessee’s right to use an asset over the lease term under the new accounting standards.

  • Acquire knowledge about the divergences in lease accounting between GAAP and IFRS, along with the underlying reasons for such disparities.
  • Comprehend the standards for capitalizing leases and the motivations for adopting a new lease accounting standard.
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ND
Nissa DegregoryMay 21, 2024
Final Answer :
A
Explanation :
The leasing exposure draft developed by the FASB and the IASB takes a property rights approach and requires lessees to record a "right-of-use" asset and the associated liability. Therefore, choice A is the correct option. Option B is incorrect because the exposure draft does not remove the asset from the balance sheet. Option C is also incorrect because the exposure draft does not take a derecognition approach. Option D is incorrect because only choice A is correct.