FASB MAKES DECISIONS ON LEASING STANDARD SIMPLIFICATION

• Land easements: The Board decided to proceed with the issuance of a final Accounting Standards Update (ASU) that:
  • Provides an optional transition practical expedient that, if elected, would not require an organization to reconsider their accounting for existing land easements that are not currently accounted for under Topic 840
  • Clarifies that new or modified land easements should be evaluated under Topic 842 (the leases standard), once effective.
• Transition approach, and separation of nonlease components from lease components for lessors only: The Board directed the staff to draft a proposed ASU, with a comment period of 30 days, that would:
  • Add an option for transition to Topic 842 that would enable an organization to not provide comparative period financial statements. Instead, an organization would apply the transition provisions of the leases standard at its effective date.
  • Add a practical expedient that would permit lessors not to separate nonlease components from the related lease components if certain conditions are met. This practical expedient could be elected by class of underlying assets, and if elected, certain disclosures would be required.