The Truck Rental and Leasing Association (TRALA) submitted comments to the Financial Accounting Standards Board (FASB) arguing against a one-size-fits-all approach to accounting for leases utilized in the truck leasing industry.
TRALA also suggested that new complex reporting and capitalization requirements should be limited to material leases with equipment costs of more than $250,000 and lease terms of longer than 60 months. The group made these suggestions in response to a proposal issued by the FASB and the International Accounting Standards Board (IASB) as part of the joint project to significantly overhaul lease accounting rules for the first time in 30 years.
The FASB/IASB lease accounting project stems from a June 2005 Securities and Exchange Commission report identifying the need to increase the clarity and accuracy of financial reporting of lease transactions. TRALA supports the FASB/IASB goal of improving the transparency of financial reporting. However, TRALA strongly believes that lease accounting should reflect the economic reality of lease transactions. TRALA also believes that small- and medium-size businesses that lease vehicles should not saddled with additional costs and administrative burdens resulting from complex reporting and capitalization requirements that do not increase the clarity or accuracy of their financial disclosures.
After the announcement of the FASB/IASB project, TRALA hosted senior staff from the FASB at its 2006 board of directors meeting to exchange ideas on the project’s scope and goals. Subsequently, through its FASB Working Group, TRALA submitted an informational letter to the FASB outlining various types of lease structures and lease terms used in the truck leasing industry. TRALA is also working with an international coalition of trade organizations representing the broader leasing industry to encourage development of workable and effective lease accounting standards. Final standards for lease accounting are expected to be adopted sometime in 2011.
Access www.trala.org to learn more.