By: George M. Wilson, SEC Institute
As we posted back in early December the FASB, after significant constituent feedback, developed plans to make changes to their new lease accounting standard to ease the transition and reduce the impact of the new standard, particularly for lessors.
The board issued the planned exposure draft on January 5, 2018. You can read about the exposure draft in this press release and find the actual exposure draft here. The main provisions of the exposure draft are:
Adding a transition option that would permit application of the new standard at its adoption date instead of at the earliest comparative period presented in its financial statements.
Adding an optional practical expedient, by class of asset, for lessors to not separate nonlease components from the associated lease components if certain conditions are met. Election of the practical expedient would require disclosures.
The comment period for the proposed ASU ends on February 5, 2018.
Land Easements Final ASU Still in Process
The FASB also decided back in December 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. This Final ASU is still in process with an estimated completion date in the first quarter of 2018.
As always, your thoughts and comments are welcome!