FASB proposes lease standard implementation improvements

By Jeff Drew

FASB issued a proposal Friday designed to ease — and reduce costs associated with — implementation of its new accounting standard for leases.

The proposed Accounting Standards Update, Leases (Topic 842), would make the following changes:

  • Add an option for transition to ASU No. 2016-02, Leases (Topic 842), that would permit an organization to apply the transition provisions of the new standard at its adoption date instead of at the earliest comparative period presented in its financial statements.
  • Add a practical expedient that would permit lessors to not separate nonlease components from the associated lease components if certain conditions are met. This practical expedient could be elected by class of underlying assets; if elected, certain disclosures would be required.

“The proposed ASU is aimed at reducing unnecessary costs around implementation of the new leases standard without compromising the ultimate quality of information provided to investors,” FASB Chairman Russell Golden said in a news release. “It’s part of our ongoing effort to proactively address implementation issues raised by our stakeholders to ensure a successful transition to the new standard.”

The proposed ASU is on the FASB website. Comments are due Feb. 5.

For more on the new standard, see the JofA article “Lease Accounting Laggards Face Serious Risks.”

Jeff Drew (Jeff.Drew@aicpa-cima.com) is a JofA senior editor.

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