FASB has issued a proposed Accounting Standards Update (ASU) intended to reduce costs and ease implementation of the Leases standard for financial statement preparers. Stakeholders are encouraged to review and provide comment on the proposed improvements by Feb. 5, 2018.
The proposed ASU would simplify transition requirements and, for lessors, provide a practical expedient for the separation of nonlease components from lease components. Specifically, the amendments would:
- Add an option for transition to ASU No. 2016-02, Leases (Topic 842), that would permit an organization to apply the transition provisions of the new standard at its adoption date instead of at the earliest comparative period presented in its financial statements.
- Add a practical expedient that would permit lessors to not separate nonlease components from the associated lease components if certain conditions are met. This practical expedient could be elected by class of underlying assets; if elected, certain disclosures would be required.