2021 07-20 CC PACKET - Laserfiche WebLink

Home

.ACCOUNTING AND AUDITING UPDATES The..following is a summary of Gavernmental Accounting Standards Board (bASB) standards expected to be implemented.in the. next few years. Due to the. COVID-19 pandemic, the:GASB.has delayed --the original implementation dates of these and other standards as described below. GASB Statement No. $7, Leases A lease is a contract that.transfers 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. Examples of nonfnancial assets:include buildings, land, vehicles, and equipment.. Any contract that meets this definition should be accounted for under the leases guidance, unless.specifcally excluded in this statement. Governments enter into leases for many types of assets. Under the previous guidance;*leases were classified as either capital or operating depending on whether the lease -met -any of the four tests. In -many cases,. the. previous guidance resulted in reporting lease transactions differently than similar nonlease financing transactions. ►'he goal of this.statement is to better meet the information needs -of users by improving accounting and financial reporting for leases by governments: It establishes a single model. for lease accounting based on. the principle that leases are financings of the right to use an .underlying asset.. This statement increases the usefulness of financial: statements by requiring recognition of certain lease. assets and liabilities for leases that previously were classified as operating leases and recognized as inflows of resources or outflows of resources based on the payment provisions of the contract. Under this statement, 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, thereby enhancing the relevance and consistency of information. about governments' leasing activities. TO xMice the cost of implemen.tadoo, this statement- includes an exception for short-term leases, defined as a.lease that, at the commenceinent of the lease term, has a maximu>it possible .term under the lease contract of 32 montl s (or less), including any options to extend, regardless of their .probability :of being exercised. Lessees and lessors should recognize short-tenn. tease payments as outflows. of resources or - inflows of resources, respectively; based on the payment provisions of the lease contract. The requirements of'this statement are effective. for reporting periods beginning after. June 15, 2021. :.21.-