The Exposure Draft however also includes material changes to lessor accounting for both balance sheet and income statements—simply as a consequence of lessors being on the other side of the lease transaction, rather than to address any perceived deficiency in lessor accounting transparency. A review of a sample of the more than 300 comment papers provided in 2009 to the IASB/FASB in response to a Discussion Paper on Lease Accounting indicates there is substantial disagreement on the need to include lessor accounting at this juncture, and whether the complexity of the proposed changes is warranted.
Nevertheless, the IASB estimates that $640 billion of annual lease payment obligations are not reflected on lessee balance sheets, and the Boards have determined that this problem cannot be addressed in a vacuum. The Boards’ primary concern is commercial real estate leases (e.g., retail, hotel, office space), which account for 75–80 percent of operating leases. Equipment leasing is only a small part of the market, but will be held to the same new standards if they are implemented. Given that comments on the Exposure Draft are due by mid-December, with Final Rules to be issued mid-2011, it would be prudent for lessors of core operating assets to begin planning their potential responses to these changes now.