List Comment Lease For Free

Paragraph 16 of Statement 87 states that for a lease that is cancellable by ?either the lessee or the lessor,? the maximum possible term is the noncancellable period. The intent of the provision is that the lessee and the lessor both have a right to cancel.

An agreement to pay money in order to use land, a building, a vehicle, or a piece of equipment for a particular period of time: The company signed a lease for the property in December. The original tenant remains liable throughout the entire term of the lease.

In other words, GASB 87 leases have to be accounted for in a manner similar to what previously was a capital lease; however, GASB 87 leases are not classified as either operating or capital leases. Instead, GASB 87 leases are recognized merely by the fact that they are financings of the right to use an asset.

Under GASB 87, a lessee is required to recognize a lease liability and an intangible right-to-use lease asset, and a lessor is required to recognize a lease receivable and a deferred inflow of resources. This improves the relevancy and consistency of information.

Under Statement 87, a lessee government is required to recognize (1) a lease liability and (2) an intangible asset representing the lessee's right to use the leased asset. A lessor government is required to recognize (1) a lease receivable and (2) a deferred inflow of resources.

GASB 87 defines a lease as a contract that conveys control of the right to use another entity's nonfinancial asset as specified in the contract for a period of time in an exchange or exchange-like transaction. GASB 87 applies to all contracts meeting this definition of a lease, unless specifically excluded.

GASB 87 defines the scope of leased assets as non-financial assets, such as land, buildings, equipment, and vehicles. Certain non-financial asset-based lease agreements are out of scope, such as: Leases of intangible assets. Leases of biological assets.