FASB Proposes Changes to Leases Guidance
Speaking recently on implementation of Accounting Standards Update (“ASU”) No. 2016-02, Leases (Topic 842), the Financial Accounting Standards Board (“FASB”) proposed amendments to the transition provisions under Topic 842 for specific land easements that existed prior to Topic 842’s effective date. In particular, optional transition guidance will be provided to a company regarding land easements that occurred before the Topic’s effective date, given that the company does not presently apply Topic 840 to such land easements.
Companies are asked to continue applying existing accounting policies for the affected land easements. Once Topic 842 is effective, the new guidance will apply to new or modified land easement agreements.
The FASB ordered its staff to draft a proposed ASU outlining the changes to be made to Topic 842. The proposed amendments will be presented for vote and have a 30-day comment period.