Leasing, FASB and the IAS

I start teaching leasing tomorrow and it is always a difficult subject for everyone. In addition, it is hard to get through to students how much of an impact the leasing standard has had on the leasing profession. There is currently before the FASB a motion to adopt the international standard on leasing, which would greatly curtail operating leasing. CFO Magazine had a good article about the how the adoption of the international accounting standard would even affect outsourcing which can be found here:

Under an accounting rule enacted in January 2004 by the International Accounting Standards Board, moreover, much of any cost savings could disappear, since companies would no longer be able to transfer any of their outsourced assets from their balance sheets to that of the service provider. That's because the contract would be considered a form of leasing, and the IASB rule won't allow assets financed by leases to be transferred for purposes of financial reporting. While the international rule won't automatically become part of U.S. GAAP, standards-setters in the United States and are bent on aligning their regimes as closely as possible (see "The Narrowing GAAP," Experts say the change could have a sizable effect on a company's reported results. "Outsourcing customers are likely to find that these new rulings have a significant impact on their balance sheets, depreciation schedules, and potentially even their earnings," Julie Giera, an analyst for Forrester Research, noted in a research report last June.