Oh What a Relief – FASB Makes Changes to the New Lease Standard!

By: George M. Wilson, SEC Institute


On November 29, 2017, after input from many constituents, an exposure draft and extensive consideration, the FASB decided to make several changes to its new lease accounting standard (ASC 842) to provide transition relief and make certain other changes. As you can read in this Media Advisory the Board announced their conclusions in advance of posting details on their website.


According to the Media Advisory, the FASB decided to issue a proposed ASU to make changes to ASC 842, including:


            Comparative Financial Statements in Transition

The proposal will include adding a transition option to allow companies to not provide comparative period financial statements with adoption. Instead, the transition provisions of the leases standard would be applied at its effective date, that is the most recent period presented only.


            Lessor accounting for separation of non-lease components from lease components

The proposal will also include adding a practical expedient that would permit lessors to not separate non-lease components from the related lease components if certain conditions are met. This practical expedient would be elected by a class of underlying assets, and if elected, would require incremental disclosures.


            Land Easements

The FASB decided to proceed with the issuance of a final ASU that provides an optional transition practical expedient for land easements that are not currently accounted for using existing lease guidance under ASC 840. Companies would not have to reconsider accounting for these land easements. This new standard will also clarify that after its effective date companies would use the new standard to evaluate new and modified land easements.



The FASB plans to make the details of the meeting available on their website within a week, so stay tuned!


As always, your thoughts and comments are welcome!



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