There has been some criticism of current lessor accounting because of the lessors control over the interest rate and the residual value used in the lease. Its been suggested that managements control over these two items allows them to manipulate earnings reported from lease transactions.

Youre a staff member at Financial Accounting Standards Board (FASB) and youve been asked to attend a meeting this afternoon to talk about whether this should be addressed by FASB. What is your opinion, and why? Keep in mind that FASB has a busy schedule and only wishes to consider items that may have a significant reporting or economic impact. There are other staff members who will be anxious to show you up, so be prepared to respond to their comments