The Governmental Accounting Standards Board (GASB) recently released GASB Statement No. 87, Leases. This project is a bit unusual in that it basically mirrors a similar recent project of the Financial Accounting Standards Board. In the end, both the private sector and the public sector will be accounting for operating lease arrangements in basically the same way. When implemented, this standard will change how the accounting and financial reporting is done for most operating lease arrangements, with very limited exceptions. The standard will not affect, however, how capital lease arrangements are currently accounted for and reported. The general theme is relatively simple - the days of accounting for multi-year operating leases simply as period expenses or expenditures (lessees) and as revenues for lessors are quickly fading away. Eventually, lessees will recognize a lease liability and an intangible asset for the right to use the underlying asset for more than one year. Lessors, on the other hand, will be reporting a leased receivable and a deferred inflow of resources. General Definitions GASB Statement No. 87 defines a lease as “…a contract that conveys control of the right to use another entity’s non financial asset (e.g., land, buildings, equipment)…for a period of
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