Defining Issues | April 2021
Insight
On April 14, 2021, the FASB discussed the risk-free discount rate practical expedient available to private and not-for-profit entity lessees, reaching tentative decisions to revise and clarify the expedient.
Applicability
ASC 842, Leases
- Private company and not-for-profit entity lessees
Relevant dates
Key impacts
The FASB reached tentative decisions to:
- Permit private entity lessees to elect the risk-free discount rate practical expedient by class of underlying asset, rather than on an entity-wide basis.
- Clarify that a lessee should still use the rate implicit in the lease when it is readily determinable even when it has elected the risk-free rate discount rate expedient.
- Issue a proposed ASU, subject to a 30-day comment letter period. The FASB staff indicated that a proposed ASU will likely be issued in June 2021.
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