This week, the Financial Accounting Standards Board (FASB) decided to attempt to reduce costs and decrease the challenges associated with implementing the board’s new lease accounting standard (FASB ASC Topic 842). The announcement contains some potentially good news for AMTdirect customers.
Clarification Regarding Land Easements
The board will issue an Accounting Standard Update (ASU) that:
- Provides an optional practical expedient for the transition. Organizations can choose not to consider their accounting for existing land easements that are not currently accounted for under FASB ASC Topic 840.
- Clarifies that new or modified land easements should be evaluated under Topic 842 (the leases standard) once effective.
Proposal to Eliminate 2 Year Look Back Requirement and Simplify Reporting for Lessors
In addition, the board decided to issue a proposed ASU with a comment period of 30 days. The proposal would:
- Add an option for transition to Topic 842 that would enable an organization to forgo supplying comparative period financial statements (the 2
yearlook back). Instead, organizations can opt to apply the transition provisions of the leases standard atits effective date. (We expect that our customers will find this welcome news indeed.)
- Add a practical expedient that would permit lessors not to separate non-lease components (CAM charges, for example) from the related lease components if certain conditions are met. This practical expedient could be elected by the class of the underlying assets, and if elected, certain disclosures would be required. This provision applies to lessors only.
As you can see, the implementation requirements for the new leasing standard continue to evolve. AMTdirect and our CPA partners are monitoring developments carefully and will make adjustments to the software as needed to streamline your path to compliance.
We encourage you to share this information with your finance team. We will continue to keep you posted with additional updates and news.