The Financial Accounting Standards Board will meet with its international counterpart later this week to discuss just how much it can accomplish in its joint project to revise lease accounting, with FASB championing a recently expanded view.

FASB and IASB have been working together to develop new standards on lease accounting, focusing their attention so far only on the accounting for lessees, or those who acquire property or other assets under lease contracts. The boards planned to save for another day the accounting that should be required for lessors, or the ones who hand over property and collect revenue under a lease arrangement.

In a regularly weekly meeting, FASB and its staff waded through the intricacies of how to develop a standard without getting excessively tripped up by the differences for lessees compared with lessors, not to mention the implications for sub-leasing. Board members said they’d be hesitant to make firm decisions on what kind of accounting to require of lessees without also considering how the same transactions will look on the lessor’s books.

“It isn’t efficient to go out with a discussion paper that ignores lessor accounting,” said FASB member George Batavick. “If you put it out you’re going to get comments that say I can’t comment on this because I don’t know what the implications are. They’d be saying things that are obvious.”

Chairman Bob Herz worried it would lead to a “train wreck.” Batavick said it doesn’t make sense to have different accounting models in place for lessees compared with lessors because it will lead to gaming. “Given some of the motivations that some preparers have, I could see us never having a lessee-lessor relationship again,” he said.

The board ultimately determined it wants the project to include not only transactions that are described as leases but also transactions that are “in substance” an acquisition, though it tangoed over what kind of terminology to use to describe such transactions. The board determined such an approach is important to determining the revenue recognition for the lessor, so should be addressed in an initial discussion paper in its joint project with IASB.