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To assist with implementing Statement No. 87, Leases, the Governmental Accounting Standards Board (GASB) has issued a proposed Implementation Guide. Comments are due April 30. 

Statement 87 is effective for reporting periods beginning after December 15, 2019—FY21 for most public institutions. The guide addresses many leasing topics by providing illustrations through a series of questions and answers.

Illustrations that public institutions may find helpful

Leases and Capitalization Threshold

Question 4.25 of the guide clarifies how an institution’s capitalization threshold can be applied to lease labilities. The answer references question 7.4.1 in GASB’s Comprehensive Implementation Guide and states that significant lease liabilities, either individually or in the aggregate, should be recognized. Therefore, the fact that a university may record as expenses (i.e., not capitalize) purchases of durable goods that are individually valued at less than $5,000, means the materiality of the lease liability associated with the leases of durable goods must be evaluated independently of the capitalization threshold. Applying question 7.4.1 to assess the materiality of the lease liability would indicate that the significance of the lease liability can be based on the significance of the lease liability to all liabilities of the primary government.

Combining Depreciation and Amortization Expenses

Question 4.40 clarifies that amortization expense for leased assets can be combined with depreciation expense in the required disclosures by function.

Leases of Assets That are Investments

Question 4.48 clarifies that when an asset is held as an investment and the investor makes the asset available for use, the contract is not accounted for as a lease. 

Topics Addressed

The guide includes questions addressing such topics as:

  • Scope and applicability of Statement 87
  • Lease terms including short-term leases
  • Leased asset substitutions
  • Easements
  • Contracts that transfer ownership
  • Recognition and measurement for lessees
  • Lease assets
  • Notes to financial statements for lessees
  • Recognition and measurement for lessors
  • Leases of assets that are investments
  • Regulated leases
  • Lease receivables
  • Deferred inflow of resources
  • Underlying assets
  • Notes to financial statements for lessors
  • Lease incentives
  • Contracts with multiple components
  • Contract combinations
  • Lease modifications and terminations
  • Sale-leaseback transactions and lease-leaseback transactions
  • Intra-entity leases
  • Statement 87 transition guidance

The guide also includes three illustrations: reporting of an equipment lease by a lessee, reporting a building lease that includes a lease incentive by a lessee, and leases that include variable payments that are based on an index or rate.

We encourage public institutions to review the guide and submit comments to NACUBO for inclusion in an industry comment letter or directly to GASB by April 30.


Sue Menditto

Senior Director, Accounting Policy


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