A Home for Wayward Lease Accounting Terms
The new lease standard, composed of ASC 842, GASB 87, and GASB 96 in the US, is meant to account for all lease obligations on financial statements, whereas the previous standard had excluded operating leases on financial statements.
ASC 842 is a new standard for lease accounting that requires all leases longer than 12 months to be recorded as assets and liabilities on balance sheets. It was created by the Financial Accounting Standards Board, of FASB, to foster more transparency between investors and companies.
GASB 87 was issued by the Governmental Accounting Standards Board in June 2017. It requires all leases that meet the formal definition of a lease to be accounted for similar to what previously was defined as a capital lease.
GASB is the Governmental Accounting Standards Board. It works to maintain accounting and reporting standards that would foster visibility and clarity in finance reporting.