The Financial Accounting Standards Board (FASB) issued an Accounting Standards Update (ASU) that reduces costs and eases implementation of the leases standard for financial statement preparers.

“The targeted improvements in the ASU address areas our stakeholders identified as sources of unnecessary cost or complexity in the leases standard,” stated FASB Chairman Russell G. Golden. “They represent the FASB’s commitment to proactively address implementation issues raised by our stakeholders to ensure a successful transition to the new standard without compromising the quality of information provided to investors.”

The ASU simplifies transition requirements and, for lessors, provides a practical expedient for the separation of nonlease components from lease components.

Specifically, the ASU provides:

• An option to apply the transition provisions of the new standard at its adoption date instead of at the earliest comparative period presented in its financial statements, and
• A practical expedient that permits lessors to not separate non-lease components from the associated lease component if certain conditions are met.