News

GASB 87: State and Local Gov'ts Face Special Challenges Beyond Mere Accounting

by Mark Koppersmith | Jan 10, 2020   ()

Previously, governmental entities reported their leases similarly to how private entities reported leases under ASC 840. While finance leases would be capitalized on the balance sheet, operating leases would be reported in the footnotes. However, the Governmental Accounting Standards Board’s Statement No. 87 (or GASB 87) requires that all operating leases now be accounted for as finance leases. As a result, leases previously classified as operating leases will not only be capitalized on the balance sheet, but also be reported differently on the income and cash flow statements. The reporting requirements will be in effect for government entities beginning Dec. 15 for all reporting periods subsequent to that date.

The standard generally mirrors leasing standards issued by the Financial Accounting Standards Board and the International Accounting Standards Board, although there are specific differences in accounting treatment. Government entities also face other challenges specific to the nature of their operations, challenges that many may not have anticipated, and which are related to the very nature of their organizations. The following are some key areas of consideration for organizations moving forward:

Read More

Source: Accounting Today

News Archive