One of the most significant recent developments affecting businesses is the implementation of GASB Statement No. 87, issued by the Governmental Accounting Standards Board (GASB). This new standard fundamentally changes how organizations account for leases, with far-reaching implications for financial reporting and compliance.
Understanding GASB No. 87
GASB No. 87 redefines the way leases are recognized on financial statements. Under the previous guidelines, leases were categorized as either operating or capital leases, with operating leases often not appearing on the balance sheet. The new standard eliminates this distinction, requiring all leases longer than 12 months to be reported as right-of-use assets and corresponding liabilities on the balance sheet.
One of the most significant recent developments affecting businesses is the implementation of GASB Statement No. 87, issued by the Governmental Accounting Standards Board (GASB). This new standard fundamentally changes how organizations account for leases, with far-reaching implications for financial reporting and compliance.
Understanding GASB No. 87
GASB No. 87 redefines the way leases are recognized on financial statements. Under the previous guidelines, leases were categorized as either operating or capital leases, with operating leases often not appearing on the balance sheet. The new standard eliminates this distinction, requiring all leases longer than 12 months to be reported as right-of-use assets and corresponding liabilities on the balance sheet.