FASB to Release Standard and Propose Transition Guidance on Leases
A final Accounting Standards Update (“ASU”) and a proposed standard by the Financial Accounting Standards Board (“FASB”) aim to lower costs and make it easier for preparers to implement its leases guidance. The FASB will issue a final standard that gives organizations an optional transition practical expedient to reconsider their accounting for current land easements that are not presently accounted for in Topic Accounting Standards Codification (“ASC”) 840, Leases. The standard also affirms that once the guidance is active, new or modified land easements must be reviewed under ASC Topic 842, Leases. Separately, FASB staffers were ordered to draft a. Read More.
Companies Seek More Guidance on Adopting FASB Leases Standard
Before the year ends, the Financial Accounting Standards Board (“FASB”) intends to take another look at Accounting Standards Update No. 2016-02, Leases (Topic 842). According to FASB Chairman Russell Golden, the board will likely consider revising the method companies must use when transitioning to the new leases standard, how landlords determine common area maintenance charges in rent payments, and updates to disclosures regarding leases in foreign currency and short-term lease expense. The standard, which requires balance sheet disclosures regarding a company’s assets and liabilities related to rented property and equipment, has raised questions concerning whether companies are prepared to implement. Read More.
REITs Want Clarity on Reporting Maintenance Fees from Tenants
Several office real estate investment trusts (“REITs”) are asking the Financial Accounting Standards Board (“FASB”) to reconsider its lease standard’s reporting requirement concerning maintenance fees that are calculated into a tenant’s rent. In a September 28 letter to the FASB, the REITs responded to the requirement under Accounting Standards Update No. 2016-02, Leases (Topic 842), which would make landlords account for service and maintenance fees separately from the real estate rental. REITs argued that separately accounting for such fees provides minimal benefit to investors and analysts. Kilroy Realty Corp Senior Vice President Merryl Werber highlighted the issue by saying there. Read More.
Lease Accounting Proposal to Help Companies with Land Easements
Utility and oil and gas companies could receive new guidance from the Financial Accounting Standards Board (“FASB”) to help account for land easements. In Proposed Accounting Standards Update (“ASU”) No. 2017-290, Leases (Topic 842): Land Easement Practical Expedient for Transition to Topic 842, the FASB gives companies with land easements what it calls a transition break. The transition break allows companies to forgo reviewing dated contract files to determine whether the transactions must be identified as leases and should be accounted for under ASU No. 2016-02, Leases (Topic 842). When the lease standard goes into effect, new easements must be reviewed. Read More.
FASB Reconfirms Lease Standard’s Effective Date
While some companies continue to struggle with the implementation of Accounting Standards Update No. 2016-02, Leases (Topic 842), the Financial Accounting Standards Board (“FASB”) has no plans to postpone the standard’s 2019 effective date for public businesses. On August 29, an FASB spokesperson said that the board would not consider a request to give companies more time to comply with the lease accounting standard. The spokesperson also remarked that there are no plans to delay the standard’s effective date. As mentioned in our August 11 blog , the American Petroleum Institute (“API”) asked the FASB to delay the standard by two years. The. Read More.
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. Read More.