The FASB has decided to reduce costs and ease the implementation burden of the Leases standard for preparers by issuing a final Accounting Standard Update (ASU) and proposing an ASU on transition guidance.
The FASB decided to proceed with the issuance of a final Accounting Standards Update (ASU) that: (1) provides an optional transition practical expedient that, if elected, would not require an organization to reconsider their accounting for existing land easements that are not currently accounted for under Topic ASC 840, Leases; and (2) clarifies that new or modified land easements should be evaluated under ASC Topic 842, Leases, once effective.
The FASB directed its staff to draft a proposed ASU, with a comment period of 30 days, which would add: (1) an option for transition to ASC Topic 842 that would enable an organization to not provide comparative period financial statements. Instead, an organization would apply the transition provisions of the leases standard at its effective date; and (2) a practical expedient that would permit lessors not to separate nonlease components from the related lease components if certain conditions are met. This practical expedient could be elected by class of underlying assets, and if elected, certain disclosures would be required.
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