5 Essential Steps for GASB 87 Lease Accounting Implementation

An understanding of the GASB 87 Lease Accounting standard is pivotal for government entities in portraying a transparent financial landscape. This groundbreaking parameter came into effect to facilitate clarity and consistency in the lease reporting by public sector bodies.

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Exploring GASB 87 Lease Accounting

GASB 87 Lease Accounting encompasses a wide range of non-financial assets, from property to heavy machinery. It’s now mandatory that lessees record lease liabilities and associated assets on their balance sheets, while lessors must acknowledge receivables and subsequent resource inflows.

Principal Elements of GASB 87

The crux of GASB 87 lies in the recognition of lease liabilities and the intangible assets linked to lease rights at their present value. Previous methodologies did not require such liabilities on balance sheets, thus masking the real fiscal obligations.

Practical Approaches to Adopting GASB 87

Initial steps toward compliance include a thorough scrutiny of all leases to discern their relevance to GASB 87. Subsequently, updating lease administration practices is imperative.

Comprehensive Guide to GASB 87 Assimilation

Distinguishing and Categorizing Leases: Start with classifying each lease to ascertain its adherence to GASB 87, analyzing contract details to confirm control over the respective asset.
Quantifying the Lease Liability and Asset: Employ the present value method for liability computation and recognize a corresponding asset, calibrated for any lease prepayments or accruals.
Creating New Fiscal Protocols: Formulate and execute precise guidelines for continuous lease accounting.
Disclosure Preparation: Ready the required extensive disclosures, shedding light on lease payments and overall liabilities.
Educating Personnel and Interested Parties: Equip staff and stakeholders with knowledge on the latest practices to ensure accurate financial documentation.

Technological Resources for Leases

Opt for sophisticated lease accounting software designed to accommodate GASB 87 Lease Accounting intricacies, which can offer automated solutions and reporting aid.

Lease Modifications and Terminations

Adjustments in leasing terms or cessation are under GASB 87’s purview, requiring entities to alter and recalibrate the associated liabilities and assets.

Perpetuating Compliance

Audit lease portfolios systematically, continuing educational workshops, and seeking expert guidance for sustained adherence to GASB 87.

Conclusion: Advancing with GASB 87

To champion the essence of GASB 87 Lease Accounting, proactive strategies, and modern tools are essential for maintaining compliance and upholding lease obligation transparency.

revenue recognition mastery essential steps fiscal integrity