AMTdirect Blog

AMTdirect Blog

GASB 87 Examples: Components of the New Lease Accounting Guidance

Posted on 3/2/20 7:00 AM by Haley Martin in Lease Accounting, in GASB, in Compliance

“Just the facts, ma’am.” Sergeant Joe Friday uttered some version of those words in just about every episode of Dragnet. So taking a cue from the iconic detective…

Here’s just the facts about GASB 87.


The Governmental Accounting Standards Board (GASB) issued Statement No. 87, Leases, in June 2017. Like its counterparts in the non-governmental sector, the governing board’s objective was to improve transparency and comparability in the accounting and financial reporting of leases. 

In a news release GASB Chairman David A. Vaudt explained, “The Board’s new leasing guidance better aligns the accounting and financial reporting of these arrangements with their economic substance.”

The primary way all three boards aimed to achieve this goal was by moving operating leases to the balance sheet. 

Whereas the Financial Accounting Standards Board (FASB) maintained its two-model approach for the classification of leases, the International Accounting Standards Board (IASB) established a single-model approach with IFRS 16, eliminating the operating lease classification. This shift was based on the thinking that all leases are basically financing arrangements for the right to use an underlying asset.

Like IFRS 16, the new lease accounting standard from the GASB uses the single-model approach. This differs from the existing GASB guidance which uses a dual-model approach more closely mirroring FASB 13 (which dates back to 1976 even before the GASB was formed). 

Through the years the GASB has issued concept statements that define terms such as asset, lease and liability and has periodically evaluated their standards to determine if they still worked for governments or if updates were called for.

But GASB 87 presents the biggest change to lease accounting for governmental entities.

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GASB 87 Leases vs. FASB 842: How Are They Different?

Posted on 2/10/20 7:00 AM by Haley Martin in FASB, in Lease Accounting, in GASB, in Compliance

It may not be glitzy and glamorous, but like The Great Gatsby, GASB 87 deals with appearances versus reality. 

And so does its nongovernmental counterpart, FASB 842.

In fact, the aim of all the new lease accounting standards is to make a reporting entity’s financial statements more transparent, thereby reflecting a more accurate picture of its financial health. This is true especially with regards to the economic substance of its leases.The new lease accounting guidance from all three boards moves substantially all leases onto the balance sheet. There are other changes, but that shift is the major, monumental one that will impact an entity’s financials the most.

Up till now, both private and public companies as well as governmental entities have been allowed to disclose operating leases only in the footnotes. 

But the problem with not including operating leases on the balance sheet is that an organization can look as though it has far fewer liabilities than it actually does. Appearances vs. reality.

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ASC 842 Changes: Death by Financial Restatement

Posted on 10/14/19 7:00 AM by Taft Tucker in FASB, in Lease Accounting, in GASB

The debate over the new FASB lease accounting standards is heating up.

A slew of complaints have been popping up in the last quarter of 2019 including one senator who’s introducing a bill to require the FASB to study new petitions in the future.

Controversy or not, one thing remains clear: No matter your lease number and no matter your company size or type, compliance with the new FASB ASC 842 changes isn’t optional.

And it’s not going to be easy.

In fact, there’s been an eyebrow-raising number of financial restatements filed in the past year. And most of them are related to the complexity of the FASB, GASB and IASB standards.  

This raises a major red flag for private companies.

In fact, the stats and stories point to the fact that financial restatements caused by the new accounting standards could be a nightmare.

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Equipment Lease Accounting: What Qualifies as an Equipment Lease?

Posted on 7/29/19 9:00 AM by Taft Tucker in Lease Administration, in FASB, in Lease Accounting, in GASB

More than 80% of American companies lease equipment rather than purchasing it.

That’s a big number.

And the reason you should care about it is even more significant. When your equipment lease accounting compliance deadline rolls around, all of your equipment leases will have to be noted on your balance sheet.

In the past, this treatment was reserved for capital leases only.

But now the Financial Accounting Standards Board (FASB) and its sister governing boards have also decided operating leases - including equipment leases - should move out of the footnotes to join the party on the balance sheet.

But just what is an equipment lease according to the accounting governing boards?

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GASB 87 Implementation Guide and Effective Date

Posted on 4/15/19 1:47 PM by Taft Tucker in GASB

The GASB 87 lease reporting standard has been all but forgotten.

In the hype of public companies preparing for compliance last year and private companies up next at the plate, the complementary mandate for government bodies is flying under the radar.

And while the effective date for GASB 87 has been delayed 18 months (same as FASB ASC 842), all the same repercussions apply.

It’s time to bring GASB 87 out of the closet.

We put together a list of the essential facts you need to know about GASB 87. With a short timeline of just 9 months to plan and execute - and few solutions on the market - you’ll benefit from understanding the dos and don'ts now.

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