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Equipment Finance News Clarification on leases standard Published: 15th March 2019 Share The Financial Accounting Standards Board (FASB) has issued an accounting standards update (ASU) to address two implementation issues facing lessors and make clear that lessees and lessors are exempt from a certain interim disclosure requirement associated with adopting the new leases standard. The new ASU aligns the guidance for fair value of the underlying asset by lessors that are not manufacturers or dealers in Topic 842, with that of existing guidance. As a result, the fair value of the underlying asset at lease commencement is its cost, reflecting any volume or trade discounts that may apply. However, if there has been a significant lapse of time between when the underlying asset is acquired and when the lease commences, the definition of fair value (in Topic 820, Fair Value Measurement) should be applied. FASB chairman Russell Golden said: “The new ASU clarifies areas identified by our stakeholders as they prepared to implement the leases standard,” “The changes will help ensure a smoother transition to the standard without affecting the quality of information provided to investors and other financial statement users.” The ASU also requires lessors within the scope of Topic 942, Financial Services—Depository and Lending, to present all “principal payments received under leases” within investing activities. Finally, the ASU exempts both lessees and lessors from having to provide certain interim disclosures in the fiscal year in which a company adopts the new leases standard. Pat Sweet Correspondent - Asset Finance Connect Sign up to our newsletter Featured Stories Corporate Member NewsGrenke partners with IUI Global to strengthen service offerings NewsTransport UK London Bus expands electric fleet NewsPACCAR reports strong Q3 revenues and profits Equipment Finance
