At its July 29, 2020 meeting, the FASB decided to propose the following amendments to ASC 842:
- Permit lessees to elect to account for variable lease payments that depend on an index or rate consistent with the requirements of International Financial Reporting Standards. Under IFRS 16, a lessee is required to remeasure the lease payments, and correspondingly the lease liability and right-of-use (ROU) asset, when the adjustment to the lease payments takes effect from a change in the index or rate used to determine those payments.
- Require a lessor to classify a lease as an operating lease if the payments for the lease are predominantly variable, regardless of whether any of the sales-type lease criteria are met.
- Clarify that when one or more, but not all, leases in a contract is modified or terminated, the company (lessee or lessor) would not apply modification accounting to the remaining lease components if the economics of those remaining leases is substantially unchanged by the modification(s) and/or termination(s).
Unrelated to ASC 842, the FASB decided to add the following projects to its technical agenda:
- Explore developing a principle for which benchmark interest rates are eligible for fair value hedge accounting.
- Address the effect of underwriter restrictions on the sale of equity securities when measuring the fair value of those securities.
- Key facts and impacts
- ASC 842 agenda decisions
- Agenda decisions unrelated to ASC 842
- Next steps