New GASB Statement on Leases Issued
The Governmental Accounting Standards Board (“GASB”) has issued a new single model to help state and local governments report leasing agreements. GASB Statement (“GASBS”) No. 87, Leases, categorizes leases as financing arrangements that allow customers to use the leased asset. Per the standard, governments that act as lessees must report a liability for the contract, as well as report an intangible asset indicating their ability to use the leased item. For government entities that are lessors, they must disclose a receivable for the lease and a deferred inflow of resources. Nonfinancial assets such as vehicles, heavy equipment, and property are. Read More.
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.
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.
Trade Groups Make Final Plea for Leases Standard Exemption
As the Financial Accounting Standards Board (“FASB”) prepares its lease accounting standard for publication, several trade groups made a last-minute attempt to have private companies exempt from the upcoming guidance. In a letter last month, the groups expressed concern that the final standard will increase complexity and not meet the needs of private business investors. The groups also believe that the extensive changes to lease accounting will hurt private companies, and cap their chances of borrowing or raising capital. The FASB has responded to several comment letters in relation to proposed Accounting Standards Update (ASU) No. 2013-270, Leases (Topic 842).. Read More.