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Last updated on February 17, 2021. Please refer to the Current Technical Plan for information about the expected release dates of exposure documents and final standards.
(Sections updated on the date above are indicated with an asterisk *)
Project Objective and Background*
Objective:
The objective of this project is to make targeted improvements to Topic 842, Leases, related to:
Sales-type leases with variable lease payments (lessor only)
Lease modification accounting.
Background:
As part of its post-implementation review efforts, the FASB continues to actively engage with stakeholders to monitor the implementation of Topic 842. Additionally, the FASB periodically receives formal agenda requests that identify implementation issues that could be improved through standard setting. This project was added to the Board’s technical agenda in response to stakeholder feedback that indicated that improvements were warranted in relation to these issues.
Exposure Documents
Exposure Draft(s):
On October 20, 2020, the Board issued proposed Accounting Standards Update, Leases (Topic 842): Targeted Improvements. The due date for comment letters was December 4, 2020.
Read comment letters on the proposed Accounting Standards Update.
Media Releases and Educational Materials
Read the press release on the proposed Accounting Standards Update.
Board Decisions*
Decisions Reached at Last Meeting (as of February 10, 2021)
The Board discussed the comment letter feedback on the three issues in the proposed Accounting Standards Update, Leases (Topic 842): Targeted Improvements, and reached the following decisions:
Issue 1: Sales-type leases with variable lease payments—lessor only. The Board decided to consider amendments to lessors’ accounting only (rather than both lessees’ and lessors’ accounting) to resolve this issue. The Board directed the staff to further research an alternative raised in the comment letters to address this issue. That alternative would require lessors to classify and account for a lease as an operating lease if a lessor (a) meets any of the criteria for sales-type lease classification (in paragraph 842-10-25-2) and (b) would recognize a selling loss at lease commencement as a direct result of variable lease payments that do not depend on an index or a rate. The Board directed the staff to perform outreach on whether that alternative is operable and would result in conclusions that are consistent with those reached when applying the lease classification guidance under Topic 840, Leases.
Issue 2: Option to remeasure lease liability—lessee only. The Board removed this issue from its technical agenda.
Issue 3: Modifications reducing the scope of a lease contract. The Board decided not to finalize the proposed amendments related to this issue without considering the other potential improvements to the lease modification model that were raised in the comment letters and at the September 2020 roundtable meeting. The Board directed the staff to identify those other potential improvements and potential solutions for the Board’s consideration at a future meeting.
Board Meeting Materials and Information*
The Board meeting minutes, handouts, and videos are provided for the information and convenience of constituents who want to follow the Board’s deliberations. All of the conclusions reported are tentative and may be changed at future Board meetings. Decisions become final only after a formal written ballot to issue a final standard.
The following are links to the minutes for each meeting. To view Board meetings and handouts from the past 90 days, click here.
February 10, 2021*
Board Meeting—The Board decided to consider amendments to lessors’ accounting only (rather than both lessees’ and lessors’ accounting) to resolve the issue of sales-type leases with variable lease payments. The Board directed the staff to further research an alternative raised in the comment letters to address that issue. The Board decided to remove the issue of lessees’ option to remeasure lease liability from the technical agenda. The Board decided not to finalize proposed amendments to lease modifications without considering other potential improvements to the lease modification model raised in comment letters and the September 2020 roundtable meeting.
July 29, 2020
Board Meeting—The Board discussed whether to amend Topic 842 to provide targeted improvements related to sales-type leases with variable lease payments, lessees’ option to remeasure lease liability for changes in a reference index or rate on which lease payments are based, and modifications that reduce the scope of a lease contract. The Board decided to do so and directed the staff to draft a proposed Accounting Standards Update for vote by written ballot.
Next Steps*
The staff will perform research and outreach and present it for the Board’s consideration at future meetings.
The staff has prepared this summary for information purposes only. Any Board decisions are tentative and do not change current accounting. Official positions of the FASB are determined only after extensive due process and deliberations.
