BC57 Having concluded that the lessor’s lease receivable and rights retained in the underlying asset both meet the definition of an asset (as described in paragraphs BC35-BC40), the IASB considered whether requiring a lessor to recognise those assets for all leases would improve financial reporting to the extent that the benefits from the improvements would outweigh the costs associated with such a change.

BC58 The IASB considered the feedback received throughout the project regarding lessor accounting and concluded that the costs associated with making changes to lessor accounting would be difficult to justify at this time because most stakeholders (including users of financial statements) were of the view that lessor accounting in IAS 17 is not ‘broken’. Consequently, the IASB decided to substantially carry forward the lessor accounting model in IAS 17.

BC59 In reaching this decision, the IASB noted that criticisms of the accounting model for leases under IAS 17 were primarily focused on lessee accounting. Consequently, when the IASB initially added the Leases project to its agenda, the project was intended to address only lessee accounting and not lessor accounting.