FASB proposes clarifications and technical corrections to the new leases standard

Also read

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

Related content

• Handbook: Leases