Law.com Subscribers SAVE 30%
Call 855-808-4530 or email [email protected] to receive your discount on a new subscription.
Lease Accounting Project
The FASB and IASB issued the second Exposure Draft (“ED”) of the proposed new leasing rules on May 16, 2013 with a deadline for comments of Sept. 13, 2013. The ED is an improvement over the 2010 ED in that it is closer to current GAAP in areas such as the definition of the lease term and lease payments. The major impacts of the ED versus current GAAP to lessees will be: capitalizing all but short-term operating leases as an asset and liability, debt covenants may have to be revised if the new capitalized operating lease liabilities are considered debt, most equipment leases will have front-loaded P&L lease costs, and sale leasebacks with purchase options will not be accounted for as sales and leasebacks. The major impacts of the ED versus current GAAP for lessors will be: a portion of upfront sales-type lease profits will be deferred, leveraged lease accounting will be eliminated, tax credits and grants will not be reported as revenue, and most residual guarantees/insurance will not be considered financial assets. The plan is to issue a new lease accounting rule in 2014 after review of comment letters to the ED and re-deliberating identified issues. The effective date when all lessors and lessees implement the rules is likely to be in 2017, although lessees and lessors will have to show comparative results for 2015 and 2016 in their 2017 financial statements. The work to transition existing leases to the new rules will be a big undertaking, more for so lessees, but also problematic for lessors.
The ED has several controversial issues and should attract a high volume of comment letters. I believe the Boards will make some changes to the proposal to improve its effectiveness in providing useful information to readers of financial statements.
A chart offering an analysis of the key elements of the proposal and the likely outcome can be found here.
Major Differences In UK, U.S. Copyright Laws
This article highlights how copyright law in the United Kingdom differs from U.S. copyright law, and points out differences that may be crucial to entertainment and media businesses familiar with U.S law that are interested in operating in the United Kingdom or under UK law. The article also briefly addresses contrasts in UK and U.S. trademark law.
The Article 8 Opt In
The Article 8 opt-in election adds an additional layer of complexity to the already labyrinthine rules governing perfection of security interests under the UCC. A lender that is unaware of the nuances created by the opt in (may find its security interest vulnerable to being primed by another party that has taken steps to perfect in a superior manner under the circumstances.
Strategy vs. Tactics: Two Sides of a Difficult Coin
With each successive large-scale cyber attack, it is slowly becoming clear that ransomware attacks are targeting the critical infrastructure of the most powerful country on the planet. Understanding the strategy, and tactics of our opponents, as well as the strategy and the tactics we implement as a response are vital to victory.
Removing Restrictive Covenants In New York
In Rockwell v. Despart, the New York Supreme Court, Third Department, recently revisited a recurring question: When may a landowner seek judicial removal of a covenant restricting use of her land?
Legal Possession: What Does It Mean?
Possession of real property is a matter of physical fact. Having the right or legal entitlement to possession is not "possession," possession is "the fact of having or holding property in one's power." That power means having physical dominion and control over the property.