Accounting standard setters are planning a series of technical corrections to big new rules on lease accounting and financial instruments, but resisted the temptation to do any further tweaking to the even bigger new rule on revenue recognition.

Staff members at the Financial Accounting Standards Board presented the board with more than 20 technical corrections to consider to standards on the recognition and measurement of financial instruments and leases in financial statements. With respect to leases, the board approved 16 separate language changes that address a number of specific requirements in the standard. In the area of financial instruments, the board approved six measures meant to clarify or improve the wording in the standard. None of the adjustments are directed at changing any of the core principles or requirements in either standard.

In the leasing standard, which takes effect in 2019 for public companies, the technical corrections are focused on issues such as residual values, implicit rates, reassessments of lease classification and lease term, subsequent measurements of variable lease payments, evaluation of investment tax credits, amounts previously recognized in business combinations, nonqualifying initial direct costs, transition guidance on sale and leaseback arrangements, impairment of net investment, and others.

In the financial instruments standard, which takes effect in 2018 for public companies, corrections deal with language regarding narrow aspects of measurement method, measurement date, forward contracts and purchased options on certain equity securities, the fair value option, financial liabilities denominated in foreign currencies, and transition guidance for certain equity securities.

As for revenue recognition, where the board has already issued a number of amendments and technical corrections, FASB decided to answer a question that’s been raised by the Big 4 through a verbal agreement to be reflected in written meeting minutes. The question involves the interplay of the new revenue recognition standard with the new lease accounting standard, where companies that act as lessors had questions about transitioning to the new requirements.

FASB said it did not intend to require lessors to revisit the allocation of contract consideration to lease components under the leasing standard when adopting revenue recognition rules. 

FASB board members noted during an open meeting to discuss the amendments that many of the requested changes are so minor they would normally be addressed in a periodic standard making any number of miscellaneous technical corrections. FASB instructed staff members to draft the proposed Accounting Standards Update, which will be issued for a 45-day comment period.

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