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FASB Issues Position on Leveraged Leases July 14, 2006 (SmartPros) The FASB on Thursday issued a staff position (FSP) that will require companies to recalculate their leveraged leases if there is a change or projected change in the timing of cash flows relating to income taxes generated by the leveraged lease. The FSP is being issued concurrent with the interpretation of FASB Statement No. 109, Accounting for Income Taxes. (See FASB Clarifies Income Tax Reporting). Leveraged leases can provide significant tax benefits to the lessor, and the accounting for such transactions can be significantly influenced by the timing of tax benefits provided to the lessor. Changes in the timing and/or amount of these tax benefits may have a material affect on the cash flows of the transaction. "Today's FSP reflects our belief that accounting should fully reflect the economics of a transaction," said FASB member Edward W. Trott. "Accordingly, any change in either the timing or the amount of the cash flows associated with these leveraged lease transactions will now be properly reflected in the financial statements." The guidance in this FSP shall be applied to fiscal years beginning after December 15, 2006. 2006 SmartPros Ltd. All rights reserved. |
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