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.