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The limited exceptions in the draft guidance include financed purchases and short-term leases of 12 months or less.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.

FEATURE

Tackling TCJA changes this tax season

Return preparers must be ready for how the Tax Cuts and Jobs Act has modified many common features of individual and business returns.

PODCAST

Why CPAs can’t wait on automation tools

What do accounting firms waiting on others to develop AI, automation, and data analytics tools have in common with a baseball fan sitting in a stadium filling with water at an exponential rate? The answer could determine your firm’s fate.