AC501 Unit 2 Standard Setting Due Process Brief Example

Reviewed by Chester Goodwin, MBA Financial Accounting and Reporting Purdue University Global Free custom sample in 24 to 48h

This AC501 Unit 2 standard setting brief follows one major project through the Board's due process from first proposal to final standard. Purdue Global AC 501, Financial Accounting and Reporting, asks MS in Accounting students to show how standards are actually made. The lease project is traced from the joint 2009 discussion paper through the August 2010 exposure draft, the May 2013 revised draft and ASU 2016-02 in February 2016. Each stage records what was proposed, what preparers objected to and what changed, from estimated renewals and contingent rents to Type A and Type B leases. The brief ends where the FASB kept two lessee models and the IASB chose one in IFRS 16.

CourseAC501 Financial Accounting and Reporting
UnitUnit 2
Paper typeStandard setting brief
LengthAbout 560 words, 5 pages double-spaced
FormatAPA 7 student paper
SchoolPurdue University Global
ProgramMS in Accounting
UpdatedOctober 2026

Free sample paper for AC501 Unit 2

1

Seven Years From Discussion Paper to ASU 2016-02: A Unit 2 Standard Setting Brief on the Lease Project

[Student Name]

Purdue University Global

AC501: Financial Accounting and Reporting

Unit 2 Standard Setting Brief

[Instructor Name]

[Date]

The documents, dates and positions described are real and drawn from the Boards' published lease documents; the summary is the writer's own.

What this part is doingStating the span, the method and the divergence in the lead shows the brief's three tasks.
2

Timeline

1. March 2009: joint discussion paper, Leases: Preliminary Views.

2. August 2010: joint exposure draft proposing a single right-of-use model.

3. May 2013: revised joint exposure draft proposing two lease types.

4. January 2016: the IASB issues IFRS 16 with a single lessee model.

5. February 2016: the FASB issues ASU 2016-02, Leases (Topic 842), with a dual lessee model.

Stage 1: The Discussion Paper

The old standard let lessees keep operating leases off the balance sheet, a structure critics said hid large obligations. The 2009 paper proposed that no lease of any length stay off the lessee's books: the use right would sit among assets and the promised rent among liabilities. It drew broad agreement on that principle and much less on the details.

Stage 2: The 2010 Exposure Draft

The 2010 draft applied one model to all leases and required lessees to estimate the lease term as the longest possible term more likely than not to occur, including renewal options, and to build expected contingent rents into the liability (Financial Accounting Standards Board, 2010). Preparers objected strongly on cost and subjectivity: estimating renewals and variable rents for thousands of leases would be expensive and would produce liabilities for payments the lessee had not committed to make. Many also objected that a single model front-loaded expense for property leases whose economics looked like a steady rental.

Stage 3: The 2013 Revised Exposure Draft

The Boards answered in 2013 with two lease types (Financial Accounting Standards Board, 2013). Type A leases, presumed for most equipment, would show interest and amortization separately. Type B leases, presumed for most property, would show a single straight-line cost. Renewal options would count only where the lessee had a significant economic incentive to exercise them, and most variable rents would be left out of the liability. Respondents welcomed the narrower estimates but found the property-based classification test arbitrary.

The Boards kept the principle that every lease longer than a year belongs on the balance sheet and gave ground on everything that made the principle expensive, which is why the final standard looks more like the 2013 draft than the 2010 one.

What this part is doingThe highlighted sentence explains the pattern of concessions, the analysis graders look for in a due process brief.
3

Stage 4: The Final Standards and the Divergence

Under ASU 2016-02, any lease running past twelve months goes on the lessee's balance sheet, yet the FASB retained a finance model and an operating model for lessees, with operating leases showing a single straight-line lease cost (Financial Accounting Standards Board, 2016). The IASB's IFRS 16 chose a single model in which every lease shows depreciation and interest (International Accounting Standards Board, 2016). The two Boards agreed on the balance sheet and parted on the income statement, which is why a lessee's operating profit can differ under the two frameworks for identical leases.

What the Process Shows

Due process worked as a filter: proposals that would be costly to apply were narrowed, while the core change survived. The divergence shows its limit. When two boards with different constituents weigh the same objections, they can reasonably reach different answers.

What this part is doingEnding on what due process filtered and what it could not settle gives the brief its conclusion.
4

References

Financial Accounting Standards Board. (2010). Leases (Topic 840) (Proposed Accounting Standards Update). FASB.

Financial Accounting Standards Board. (2013). Leases (Topic 842): A revision of the 2010 proposed FASB Accounting Standards Update, Leases (Topic 840) (Proposed Accounting Standards Update). FASB.

Financial Accounting Standards Board. (2016). Leases (Topic 842) (Accounting Standards Update No. 2016-02). FASB.

International Accounting Standards Board. (2016). IFRS 16 leases. IFRS Foundation.

Reading the AC 501 Unit 2 instructions

Unit 2 of AC501 asks you to explain how a standard moved through due process. Choose a project with a public record and lay out its timeline, naming each document and date. For each stage, state what the Board proposed, summarize the main objections by constituency and explain what changed in response. Identify the principle that survived from start to finish and the details that were given up. If the project was joint with the IASB, explain where and why the two boards diverged. Close with what the project shows about how due process works and where it falls short. Keep quotations from comment letters short and summarize the rest. Cite the discussion paper, the exposure drafts and the final standards in APA 7.

Inside the AC501 Unit 2 example

The sample opens with a five-item timeline from the March 2009 discussion paper to ASU 2016-02. Stage one explains the original complaint about operating leases kept off the balance sheet. Stage two describes the 2010 draft's single model, with renewal options and contingent rents estimated into the liability, and the cost objections it drew. Stage three covers the 2013 draft's Type A and Type B leases and the reaction to its property-based classification. The highlighted sentence names the pattern: the principle kept, the expensive details dropped. Stage four sets ASU 2016-02's finance and operating models beside IFRS 16's single model and explains why operating profit can differ. A closing section treats due process as a filter with limits.

AC501 Unit 2 rubric: what earns full points

Due process briefs in AC501 earn points for an accurate timeline and for linking each change to the objections that caused it. Graders check documents and dates and expect each stage to say what was proposed and what moved. The rubric rewards students who identify the core principle that survived and who explain divergence between boards in terms of different constituents or judgments. Summaries of objections should be organized by who raised them. A brief that only lists dates, or only describes the final standard, misses most of the available marks. Clear structure, precise use of the documents' names and APA 7 citations to each document complete the work.

AC501 Unit 2 help from the desk

A common Unit 2 weakness is describing the final standard in detail and the earlier proposals in a sentence each, which hides the process the unit is about. Dates are wrong or missing. Objections are described as coming from everyone, rather than from preparers, users or auditors. Students credit the final standard's changes to the Board's own rethinking when the record shows they answered comment letters. Divergence with the IASB is mentioned but not explained. The conclusion praises due process without saying what it could not settle. If your section assigns a different project, such as revenue or credit losses, our writers can trace its record stage by stage.

Get an AC501 Unit 2 example written to your instructions

Name the standard your section wants traced, or accept the lease project as a model, and include the Unit 2 instructions with the rubric. The brief traces each stage from proposal to final update, attributes the objections and ties each one to the change it produced. There is no fee for a first sample; allow 24-48h. The paper above is an original model document written by our desk, not a submitted student paper and not an official Purdue University Global document.

Request this unit free All AC501 units Finished samples

More AC501 papers and MS in Accounting samples

AC501 Unit 2 questions, answered

Why does the sample use the lease project?

Because its record is long, public and full of visible changes: two exposure drafts, a redesigned lessee model and a split with the IASB. That makes due process easy to show at work. Where your section assigns a different standard, the same four-part structure applies, proposal, objections, response and evidence, with that project's own documents cited.

Does the brief need to quote comment letters?

Rarely at length. The record behind a major project runs to hundreds of letters, so the brief summarizes objections by constituency and quotes only where one letter's wording captures a widely held position. Citing the Board's own basis for conclusions, which responds to the main objections, is often the more efficient evidence.

How much about the FASB's oversight belongs in the brief?

Enough to explain authority, usually about a page. The Financial Accounting Foundation oversees the Board, and the SEC recognizes it as the standard setter for public companies. Sections vary in how much institutional detail they expect, so the sample keeps this to a closing page that can be expanded where a prompt asks for more.

Where can I find a free AC501 Unit 2 sample paper?

This page holds a full AC501 Unit 2 standard setting brief tracing the lease project from the 2009 discussion paper to ASU 2016-02 and IFRS 16, with objections and changes at each stage and APA 7 references.

Why did the FASB and IASB end with different lessee models?

Both agreed leases longer than twelve months belong on the balance sheet, but the FASB kept a straight-line cost for operating leases, while the IASB chose depreciation plus interest for every lease. Their constituents weighed income statement effects differently.