FASB approves new leases standard transition relief

KPMG reports that on March 7, 2018, the FASB affirmed its previous proposal to provide transition relief for lessees and lessors under the new leases standard. The new transition option will allow companies to adopt the new standard without revising comparative period reporting or disclosures.

Applicability

• All companies within the scope of the new leases standard

Relevant dates

• The effective date of the final ASU will be decided by the Board at a future meeting when it redeliberates the remainder of the proposed ASU that included the new transition option. However, the effective date of the amendments is expected to coincide with the effective date of the new leases standard for companies that have not early adopted

Key impacts

• The new transition option will permit companies to use the effective date of the new leases standard as the date of initial application
• Companies that elect this option will not have to adjust their comparative period financial statements for the effects of the new leases standard, or make the new required lease disclosures for periods before the effective date
• The new transition method changes when an entity initially applies the transition requirements of Topic 842; however, it does not change how those requirements are applied
• Companies that elect this transition option will include the disclosures that were required under Topic 840 for each comparative period presented in the interim and annual financial statements prepared post-adoption, as well as the prior year annual balance sheet disclosures (e.g. operating and/or capital lease maturity tables)

Related content

• Read more about the FASB’s initial proposal: Proposed ASU on lease components and transition relief
• Handbook: Leases