Introducing “Approach Y”: A Better Lease-Accounting Model for Lessees (Part 5)
(Previous Posts: Part 1, Part 2, Part 3, Part 4)
Here is the fifth in a series of working papers that I am preparing to explain “Approach Y”—a lease-accounting model for entities that are lessees. The new working paper focuses on the significant implications of Approach Y’s terminology, i.e., the specific words and phrases that are integral elements of Approach Y’s unique presentation/disclosure model. In comparison to other approaches, the terminology of Approach Y is significantly less likely to confuse financial-statement users and significantly less likely to create adverse unintended consequences for reporting entities.
Please find the new paper attached.
Attachments
Approach Y – Working Paper 5 (PDF)
I welcome your feedback on the new working paper. I also invite you to watch for my additional working papers.
Please see my followup post (Part 6) here. Attached to it is a sixth working paper that provides additional evidence that the “Interest and Amortization” (I&A) model (formerly known as “Approach A” or the “Accelerated” approach) does not represent the economics of leasing arrangements as faithfully as Approach Y does. In particular, this paper demonstrates that Approach Y exhibits a necessary characteristic of faithful representation that the I&A model lacks.