1. Accounting for Leases FASB / IASB Joint Project Update Private Company Financial Reporting Committee September 2008

2. ACTIVITY IN LAST 12 MONTHS 10/2007 – FASB & IASB met separately 7/2008 – FASB & IASB met separately

3. TENTATIVE DECISIONS Scope (7/2008)  Lessor project deferred several years Continue current accounting for several years  Lessee project to be completed by 2011 Apply finance lease model (IAS 17) to all leases

4. TENTATIVE DECISIONS, cont’d Options to Extend or Terminate (7/2008)  Not separate assets  Include in best estimate of lease term

5. TENTATIVE DECISIONS, cont’d Contingent Rentals (7/2008)  Include in best estimate of rentals payable IASB = probability-weighted measurement FASB = not probability-weighted measurement

6. TENTATIVE DECISIONS, cont’d Initial Measurement (7/2008)  Similar to current capital lease accounting Asset for right to use leased item Liability for payment obligations  Both measured @ PV of expected payments Discount @ lessee’s incremental borrowing rate

7. OTHER DISCUSSIONS Subsequent Measurement (7/2008)  IASB decided to: Amortize asset systematically Apportion payments between liability & interest  FASB discussed, but did not decide to: Use IASB’s approach, or Recognize straight-line rent expense

8. OTHER DISCUSSIONS, cont’d Lease Classification (7/2008)  IASB removed existing classifications  FASB discussed, but did not decide to do so

9. FUTURE PLANS Preliminary Views to be published in 4Q08

10. FOR MORE INFORMATION See Project Update on FASB’s website at: http://72.3.243.42/project/leases.shtml