FASB has proposed changes to Topic 842, Leases for related parties under common control. The proposal would change the evaluation of the lease term for private entities under common control to allow the use of what was in writing. The proposal would also change the amortization of leasehold improvements for all common control entities including public entities. Comments are due January 16, 2023.
GASB has issued a proposed Omnibus Exposure Draft. The ED addresses implementation issues for leases, PPP and SBITA as well as targeted accounting guidance. It also addresses the delay in reference rate reform and LIBOR discontinuance. The Omnibus addresses a variety of topics that are not large enough to address in a standalone standard but that improve financial reporting. Comments are due September 17, 2021.
The FASB has issued an exposure draft regarding the use of the discount rate alternative offered to nonpublic entities. After receiving feedback that the risk free rate was not as widely adopted due to relatively low interest rates, the FASB is now proposing permitting the use by class of assets as opposed to the current requirement at the entity level. Comments are due July 16, 2021.
The AICPA has issued a Technical Q&A (TQA) titled Accounting for Lease Components in Type A Life Care Contracts by Continuing Care Retirement Communities. Issued August 2020, the TQA addresses common questions in the healthcare arena related to the application of lease accounting (Topic 842) for Type A Life Care Contracts. The TQA provides CCRCs with common considerations to determine whether there is a lease and if so, what the appropriate accounting would be. This has been a hot topic for the CCRC industry and many will be grateful to have some guidelines for accounting purposes which should reduce diversity in practice.