Lessor
narrow scope improvements. The Board redeliberated the proposed
amendments to Topic 842, Leases, for three issues related to lessor accounting
in that Topic.
Issue 1: Sales Taxes and Other Similar Taxes Collected from
Lessees
The Board affirmed its decision to provide an accounting policy
election for sales and other similar taxes not to be accounted for as lessor
costs as provided in the proposed Accounting Standards Update.
Issue 2: Lessor Costs
The Board decided to require that
lessors exclude from variable payments all costs paid by a lessee directly to a
third party. Additionally, the Board decided that costs not part of the
consideration in the contract that are paid by a lessor directly to a third
party and are reimbursed by a lessee are considered lessor costs that the lessor
should account for as variable payments.
Issue 3: Recognition of Variable Payments for Contracts with Lease
and Nonlease Components
The Board affirmed its decision to clarify
paragraph 842-10-15-40, subject to additional amendments that would further
clarify how and when variable payments may be allocated to a lease component
only.
Transition and Effective Date
For entities that have not yet
adopted the amendments in Accounting Standards Update No. 2016-02,
Leases
(Topic 842), the Board decided to align the transition and effective date
guidance of a final Update with the guidance in the amendments in Update
2016-02.
For entities that have already adopted Update 2016-02 at the
time a final Update is issued, the Board decided that the effective date should
be the original effective date of Update 2016-02 for those entities.
Alternatively, those entities may adopt the amendments either (1) in the first
reporting period ending after issuance of the Update or (2) in the first
reporting period following the issuance of the Update. The Board decided to
allow either prospective application or retrospective application for entities
that have already adopted the amendments in Update 2016-02.
The Board
decided that the amendments apply to all new and existing leases.
Analysis of Costs and Benefits
The Board concluded that it
has received sufficient information and analysis to make an informed decision on
the issues presented and that the expected benefits of the amendments justify
the expected costs.
Next Steps
The Board directed the staff to draft a final
Accounting Standards Update for vote by written ballot.