Defining Issues | September 2017

 

FASB proposes clarifications and technical corrections to the new leases standard

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Applicability

Proposed ASU on land easements

  • Companies with land easements, particularly in the energy, utilities, transportation and telecom industries

Proposed ASU on technical corrections

  • All companies within the scope of the new leases standard

Relevant dates

Proposed ASU – land easements

  • September 25, 2017 – FASB issued proposed ASU
  • October 25, 2017 – Comments due on proposed ASU

Proposed ASU – technical corrections

  • September 27, 2017 – FASB issued proposed ASU
  • November 13, 2017 – Comments due on proposed ASU

Key impacts

The proposed ASU on land easements clarifies that:

  • Land easements are within the scope of the new leases standard.
  • Land easements would only be accounted for under other guidance if they do not meet the definition of a lease under the new standard.
  • The proposed ASU includes a practical expedient to allow an entity not to assess at transition whether a land easement meets the definition of a lease if the entity did not previously evaluate whether it was or contained a lease under the current leases standard (ASC 840).

The proposed ASU on technical corrections:

  • Includes 16 technical corrections to the new leases standard and other accounting topics.
  • Addresses issues raised by constituents to alleviate unintended consequences from applying the new guidance.
  • Does not change core principles of the new standard, significantly affect application of the new standard, or require significant additional costs to implement.

Report contents

  • Proposed ASU – land easements
  • Proposed ASU – technical corrections
  • Effective dates and transition
  • Next steps

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