In July, the Financial Accounting Standards Board (“FASB”) issued an Accounting Standards Update (“ASU”) that includes targeted improvements to its leases standard. ASU No. 2018-11, Leases (Topic 842): Targeted Improvements, introduces a transition model for entities and offers a practical expedient to lessors concerning separation of lease and non-lease components. The new standard also provides entities the option to apply the transition requirements at the guidance’s adoption date rather than the earliest comparative period disclosed in financial statements.
For entities that have not adopted Topic 842, the effective date of ASU No. 2018-11 is the same as the effective date of ASU No. 2016-02. For entities that have already implemented Topic 842, the practical expedient can be selected either in the first reporting period after the issuance of ASU No. 2018-11 or at the original effective date of Topic 842 for that entity.