GASB Newsletter Discusses New Leases Standard
In its latest newsletter, GASB Outlook, the Governmental Accounting Standards Board (“GASB”) highlights the board’s forthcoming standards on lease accounting. Expected to be issued later this month, the new standard is necessary due to the current leasing guidance predating the GASB. The existing guidance also does not consider the conceptual framework, such as the definitions of assets and liabilities. Further, the new guidance will eliminate the distinction between operating and capital leases by handling all leases as financings. The lease standard will be effective for reporting periods starting after December 15, 2019. Read the full newsletter article on GASB.org.
FASB Clarifies Lease Accounting Guidance
In a follow-up to its November 30, 2016, meeting, the Financial Accounting Standards Board (“FASB”) staff responded to stakeholder feedback on Accounting Standards Update No. 2016-02, Leases (Topic 842). At its May 10 meeting, FASB staff answered questions concerning the following aspects of the new leases guidance: Pipeline Laterals. The FASB affirmed that the new guidance considers a pipeline lateral as an identified asset. The FASB also advised companies to base their evaluation on a pipeline lateral on whether the customer can acquire all the economic benefits from the identified asset, and is able to instruct use of that identified asset.. Read More.
Basel Committee Issues Lease Accounting Guidance
Last week, the Basel Committee on Banking Supervision issued interpretative guidance for the Financial Accounting Standards Board and International Accounting Standards Board’s upcoming lease accounting changes. Presented as frequently asked questions, the guidance relates to Accounting Standards Update No. 2016-02, Leases (Topic 842), and International Financial Reporting Standards 16, Leases. Specifically, the three questions cover how new assets and liabilities are disclosed on bank balance sheets due to the FASB and IASB’s changes to accounting for a company’s rented office space and equipment. The first question says that a leased intangible asset should be exempt from the regulatory capital calculation.. Read More.
GASB to Hold Three-Day Meeting Starting Tomorrow
Beginning Tuesday, the Governmental Accounting Standards Board (“GASB”) will hold a three-day meeting at the Financial Accounting Foundation’s offices in Norwalk, Connecticut. According to its Notice of Meetings , the GASB will discuss the following topics: The final statement, Certain Asset Retirement Obligations The proposed Exposure Draft, Implementation Guide No, 201X-X, Implementation Guidance Update—201x-x The Exposure Draft, Leases A review of the preballot draft of the Invitation to Comment, Financial Reporting Model Improvements-Governmental Funds Debt Disclosures, including Direct Borrowing—Reexamination of Statement Nos. 34, 38, and 62 Revenue and expense recognition Daily meetings are expected to start at 8:30 a.m. ET. With the exception. Read More.
FASB Releases Updates on Accounting for Leases
By: Sara Crabtree , Senior Manager Previous lease accounting practices have been criticized for failing to provide accurate financial statements. Those practices did not require the recognition of the assets and liabilities resulting from operating leases to be on the balance sheet. On February 25, 2016, the Financial Accounting Standards Board (“FASB”) released Topic 842, Leases. The purpose of this update is to increase the transparency and comparability of entities which engage in leasing activities who previously kept their leasing obligations off the balance sheet. The Board’s intention is to require enough information on an organization’s financial statements so users may have. Read More.
FASB Issues Lease Accounting Standard
Today, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (ASU) No. 2016-02, Leases (Topic 842). The long-awaited guidance is intended to improve financial reporting for leasing transactions. The FASB estimates that there is over $1 trillion of off-balance sheet operating lease commitments for SEC registrants based on a 2005 Securities and Exchange Commission report. The new guidance will require lessees to recognize a right of use asset and related lease liability. Using the classification similar to Topic 840, the ASU identifies financing leases and operating leases. Financing leases would recognize amortization and interest expenses, while operating leases would. Read More.