How will gasb 87 lease accounting for airports?
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- A new Governmental Accounting Standards Board (GASB) standard, GASB Statement No. 87, Leases, was issued in June 2017, and airports will be impacted. The new standard revises the financial reporting for leases based on the foundational principle that leases are financings of the right to use an underlying asset.
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A new Governmental Accounting Standards Board (GASB) standard, GASB Statement No. 87, Leases, was issued in June 2017, and airports will be impacted. The new standard revises the financial reporting for leases based on the foundational principle that leases are financings of the right to use an underlying asset.
In May 2020, the Governmental Accounting Standards Board (GASB) announced the postponement of the effective date of Statement No. 87, Leases, by 18 months. Previously, airports were expected to adopt GASB 87 for all reporting periods after December 15, 2019. GASB 87 is now scheduled to be effective for fiscal years beginning after June 15, 2021.
Governmental Accounting Standards Board (GASB) Statement 87 and 2020 are here! Airports must implement the new lease accounting standard starting with reporting periods beginning after December 15, 2019. That means December 31, 2020, annual reports will be affected by this Statement. If not already completed, your airport needs a plan on how to address the implications and requirements of GASB 87.
Review your fixed asset listings to identify assets used or operated by third parties that wouldn’t be considered a lease. These may fall within the scope of GASB 87. Review the sources of cash receipts to identify parties paying your airport for services that wouldn’t typically be considered a lease.
As airports work to determine the steps needed to implement GASB 87, Leases, they should pay particular attention to guidance on regulated leases in paragraphs 42 and 43. Aviation leases between airports and air carriers regulated by the Federal Aviation Administration are explicitly mentioned as a type of lease that is exempt from balance sheet recognition.
What is GASB 87? GASB 87 will replace the current operating and capital lease categories with a single model for lease accounting based on the concept that leases are a means to finance the right to use an asset. Under the new rules, a lessee will recognize a lease liability and an intangible asset while the lessor will recognize a lease receivable and a deferred inflow of resources. However, in order to properly implement this standard, there are some key definitions and concepts to ...
Short-term leases: According to Statement 87, if a lease’s maximum term, under the written terms of the lease (including any options to extend, regardless of their probability of being exercised), is less than 12 months at its inception, it is a short-term lease and is exempt from the accounting changes in the standard. Under Statement 87, short-term leases will continue to be accounted for in a similar manner to previous guidance for operating leases – by recording expense by lessees ...
Under GASB Statement No. 87, Leases, the majority of leases will be recorded on the statement of net position of the lessee/lessor by establishing either a lease liability or lease receivable, and a corresponding lease asset or deferred inflow of resources.
GASB 87 affects recognition of both revenues and expenses Lessor/Revenues Lessee/Expenses Balance Sheet Recognize lease asset and deferred inflow of resources Recognize lease liability and right to use lease asset Income Statement Reclassify some rental revenues to interest revenues Reclassify some rental expenses to interest expenses