.png?height=120&name=LC-Logo-HiRes-Purple%20(1).png){kind=logo}
What to Consider for Transition Leases Under GASB 87
A Transition Lease is any lease with a Commencement Date before the Initial Application Date of the lease accounting standard.
Example:
Lease commencement date: March 1, 2015
Initial Application Date of new accounting standard: July 1, 2022
Transition Lease Start Date in LeaseCrunch
When entering a transition lease into LeaseCrunch software, the start date of the transition lease is entered as the same day as the Initial Application Date. The start date is populated on Step 1 of 'Add Leases'.
When the start date of a lease matches the Initial Application Date of the corresponding reporting entity, the software prohibits entry of initial Lease Incentives and Initial Direct Costs and routes entry of any pre-existing balances to 'Existing Balances under Previous Lease Guidance'.
GASB 87 Adoption Guidance
Under GASB 87, any transition lease must be recognized on the initial application date according to the circumstances and facts as of that date as stated below in the GASB Implementation Guide No. 2021-1, Implementation Guidance Update - 2021:
Paragraph 94 of Statement 87 states that “leases should be recognized and measured using the facts and circumstances that existed at the beginning of the period of implementation. If applied to earlier periods, leases should be recognized and measured using the facts and circumstances that existed at the beginning of the earliest period restated.” For leases that are already in effect at transition, a government should consider the beginning of the period of implementation or the beginning of the earliest period restated, whichever is earlier, as the commencement of the lease term, even if the actual lease started before that date.