FASB Proposes Amendments to Guidance on Common-Control Lease Arrangements

The FASB has issued a proposed Accounting Standards Update (ASU), Leases (Topic 842):Common Control Arrangements, which would amend certain provisions of ASC 842 that apply to arrangements between related parties under common control. Specifically, the proposal would:

• Offer private companies, as well as not-for-profit entities that are not conduit bond obligors, a practical expedient that gives such entities the option of using the written terms and conditions of a common-control arrangement when determining (1) whether a lease exists and (2) the subsequent accounting for the lease, including the lease’s classification.
• Amend the accounting for leasehold improvements in common-control arrangements for all entities.

Comments on the proposed ASU are due by January 16, 2023. For more information, see the press release on the FASB’s Web site.