FASB Issues ASU on Common-Control Lease Arrangements
March 27, 2023
The FASB has issued Accounting Standards Update (ASU) No. 2023-01, Leases (Topic
842): Common Control Arrangements, which amends certain provisions of ASC 842
that apply to arrangements between related parties under common control. Specifically,
the ASU offers 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. In addition, the ASU amends the accounting for leasehold
improvements in common-control arrangements for all entities.
ASU 2023-01 is effective for fiscal years beginning after December 15, 2023, including
interim periods within those fiscal years. Early adoption is permitted in any annual or
interim period as of the beginning of the related fiscal year.
For more information, see the press
release on the FASB’s Web site.