FASAB seeks feedback on proposed practical expedient for embedded leases

The Federal Accounting Standards Advisory Board (FASAB) is seeking feedback on a proposed standard that would provide a practical expedient for reporting on embedded leases.

Stakeholders have until July 30 to comment on Embedded Leases Practical Expedient, a proposed Statement of Federal Financial Accounting Standards (SFFAS) under which reporting entities could elect to apply a practical expedient to contracts or agreements that meet certain eligibility conditions and account for them as nonlease in their entirety.

According to a news release, reporting entities could apply the practical expedient to groups of contracts or agreements that are reasonably similar in nature. Contracts or agreements with multiple components that do not meet the eligibility conditions would continue to be reported following the guidance in paragraphs 72–77 of SFFAS 54, Leases.

“The board continues to support adoption of the leases guidance through its post-implementation research and monitoring activities,” FASAB Chair Terry Patton said in the release. “These proposed amendments are an important step in our efforts to ensure our standards remain consistent with federal financial reporting objectives and meet user needs, while considering the costs of implementation.”

— To comment on this article or to suggest an idea for another article, contact Bryan Strickland at Bryan.Strickland@aicpa-cima.com.