FASB Proposes Improvements to Lease Standard Implementation
Norwalk, CT, January 5, 2018—The Financial Accounting Standards Board (FASB) today issued a proposed Accounting Standards Update (ASU) intended to reduce costs and ease implementation of the Leases standard for financial statement preparers. Stakeholders are encouraged to review and provide comment on the proposed improvements by February 5, 2018.
“The proposed ASU is aimed at reducing unnecessary costs around implementation of the new Leases standard without compromising the ultimate quality of information provided to investors,” stated FASB Chairman Russell G. Golden. “It’s part of our ongoing effort to proactively address implementation issues raised by our stakeholders to ensure a successful transition to the new standard.”
The proposed ASU would simplify transition requirements and, for lessors, provide a practical expedient for the separation of nonlease components from lease components. Specifically, the amendments would:
- Add an option for transition to ASU No. 2016-02, Leases (Topic 842), that would permit an organization to apply the transition provisions of the new standard at its adoption date instead of at the earliest comparative period presented in its financial statements
- Add a practical expedient that would permit lessors to not separate nonlease components from the associated lease components if certain conditions are met. This practical expedient could be elected by class of underlying assets; if elected, certain disclosures would be required.
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.