FASB addressed two lessor implementation issues and clarified an exemption for lessors and lessees from a certain interim disclosure requirement associated with adopting the board's new lease accounting standard.
In Accounting Standards Update (ASU) No. 2019-01, Leases (Topic 842): Codification Improvements, FASB aligns the new guidance with existing guidance for fair value of the underlying asset by lessors that are not manufacturers or dealers in FASB ASC Topic 842, Leases.
As a result, the fair value of the underlying asset at lease commencement is its cost, reflecting any volume or trade discounts that may apply. However, if there has been a significant lapse of time between when the underlying asset is acquired and when the lease commences, the definition of "fair value" in Topic 820, Fair Value Measurement, should be applied.
In addition, the new ASU requires lessors within the scope of Topic 942, Financial Services — Depository and Lending, to present "all principal payments received under leases" within investing activities.
The ASU also exempts lessees and lessors from having to provide certain interim disclosures in the fiscal year in which a company adopts the new lease accounting standard.