Proposal would change governments’ lease approaches

GASB proposes a principle for reporting.

State and local governments would report leases based on the principle that leases are financings of the right to use an underlying asset, under a proposal GASB issued in February.

The proposal would provide guidance for lease contracts for nonfinancial assets, such as vehicles, heavy equipment, and buildings. The proposed guidance would not apply to grants, donated assets, or leases of intangible assets such as patents and software licenses.

The limited exceptions in the draft guidance include financed purchases and short-term leases of 12 months or less. The exposure draft, Leases, would require a lessee government to recognize a lease liability and an intangible asset representing its right to use the leased asset. A lessor government would be required to recognize a lease receivable and a deferred inflow of resources.

The proposal also addresses lessee reporting on amortization expense, interest expense, and note disclosures, as well as lessor reporting on lease revenue, interest revenue, and note disclosures.

Comment can be submitted by email to director@gasb.org by May 31.

SPONSORED REPORT

Get your clients ready for tax season

These year-end tax planning strategies address recent tax law changes enacted to help taxpayers deal with the pandemic, such as tax credits for sick leave and family leave and new rules for retirement plan distributions, as well as techniques for putting your clients in the best possible tax position.

RESOURCES

Keeping you informed and prepared amid the coronavirus crisis

We’re gathering the latest news stories along with relevant columns, tips, podcasts, and videos on this page, along with curated items from our archives to help with uncertainty and disruption.