Future of accounting for aircraft leases

Deloitte examines the key proposals in the recent revised IASB Exposure Draft

Brian O’Callaghan and Goind Ram Khatri review the proposals of the revised IASB Exposure Draft and assess their impact on financial reporting for lessors and lessees, while also considering the operational challenges which may result for industry participants.

First published in the Airfinance Annual.

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Future of accounting for aircraft leases

Ireland has long been one of the world’s major centres for aircraft leasing, and the industry has been a keen observer of the recent revised IASB Exposure Draft for financial reporting of Leases.

While the IFRS framework outlined in International Accounting Standard 17 on Leases is well understood, has been consistently applied and includes definitive distinctions between lease classes, it has not been without its critics. Former IASB Chairman, Sir David Tweedie, has often been quoted as stating that it is his desire to fly on an airplane that is actually on an airline’s balance sheet before he retires, referring to the common operating lease structures in place where a lessee is not required to recognise lease assets or liabilities on their balance sheet.

The IASB responded to the criticism by adding leases to its agenda and issued a discussion paper in March 2009 and an exposure draft in August 2010 with an expectation to overhaul the existing accounting standard as soon as possible. However, because of the complexity of the issue the IASB was not able to achieve buy-in from different stakeholders and as a result has had to re-expose the standard in May 2013.

Attached, we look at some of the key proposals in the recently issued exposure draft in more detail, their impact and possible challenges for the aircraft leasing industry as a whole.


Brian O'Callaghan

Partner - Financial services


Goind Ram Khatri

Senior Manager

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