FASB Clarifies Implementation Guidance and Disclosure Requirements in Leases Standard
Norwalk, CT, March 5, 2019—The Financial Accounting Standards Board (FASB) today issued an Accounting Standards Update (ASU)
that addresses two lessor implementation issues and clarifies that
lessees and lessors are exempt from a certain interim disclosure
requirement associated with adopting the new leases standard.
“The new ASU clarifies areas identified by our stakeholders as they
prepared to implement the leases standard,” noted FASB Chairman Russell G. Golden.
“The changes will help ensure a smoother transition to the standard
without affecting the quality of information provided to investors and
other financial statement users.”
The new ASU aligns the guidance for fair value of the underlying asset
by lessors that are not manufacturers or dealers in Topic 842, with that
of existing guidance. As a result, the fair value of the
underlying asset at lease commencement is its cost, reflecting any
volume or trade discounts that may apply. However, if there has been a
significant lapse of time between when the underlying asset is acquired
and when the lease commences, the definition of fair value (in Topic 820, Fair Value Measurement) should be applied.
The ASU also requires lessors within the scope of Topic 942, Financial
Services—Depository and Lending, to present all “principal payments
received under leases” within investing activities.
Finally, the ASU exempts both lessees and lessors from having to provide
certain interim disclosures in the fiscal year in which a company
adopts the new leases standard.
The ASU is available at www.fasb.org.
About the Financial Accounting Standards Board
Established in 1973, the FASB is the independent, private-sector,
not-for-profit organization based in Norwalk, Connecticut, that
establishes financial accounting and reporting standards for public and
private companies and not-for-profit organizations that follow Generally
Accepted Accounting Principles (GAAP). The FASB is recognized by the
Securities and Exchange Commission as the designated accounting standard
setter for public companies. FASB standards are recognized as
authoritative by many other organizations, including state Boards of
Accountancy and the American Institute of CPAs (AICPA). The FASB
develops and issues financial accounting standards through a transparent
and inclusive process intended to promote financial reporting that
provides useful information to investors and others who use financial
reports. The Financial Accounting Foundation (FAF) supports and oversees
the FASB. For more information, visit www.fasb.org.