Wiley GAAP for Governments 2020

19ACCOUNTING FOR LEASES

• Introduction
• Accounting Basis
  • Lessee Accounting
  • Lessor Accounting
• Other Leasing Issues for Governmental Entities
  • Operating Leases with Scheduled Rent Increases
  • Fiscal Funding and Cancellation Clauses
  • GASB Statement No. 87—Leases
    • Definition of a Lease
    • Lease Term
    • Lessee Accounting
    • Lessor Accounting
    • Contracts with Multiple Components and Contract Combinations
    • Short-Term Leases
    • Lease Terminations and Modifications
    • Subleases and Leaseback Transactions
    • Effective Date and Transition
• Summary

INTRODUCTION

Accounting for leases is one of the more technically challenging areas in accounting, including governmental accounting. This chapter describes the accounting and financial reporting requirements for both lessees and lessors. Essentially, these accounting requirements depend on whether the lease is classified as an operating lease or a capital lease. This classification is made in the same manner by governmental entities as by commercial enterprises. Two important differences must be considered, however. The first is whether the lease is accounted for by a governmental fund or a proprietary fund. The accounting and financial reporting requirements differ significantly. The second is whether an operating lease has scheduled rent increases inherent in its terms and conditions. The accounting for such scheduled rent increases differs for governmental entities from the accounting used by commercial enterprises for scheduled rent increases.

In future years, ...