According to the FASB, the amendments would:

  • Adjust ASU No. 2016-02, Leases (Topic 842), to allow for a new option permitting companies to apply “transition provisions of the new standard at its adoption date instead of at the earliest comparative period presented in its financial statements” and

  • “Add a practical expedient that would permit lessors to not separate nonlease components from the associated lease components if certain conditions are met. This practical expedient could be elected by class of underlying assets; if elected, certain disclosures would be required.”

It’s expected that the ASU would result in simplified transition requirements while providing lessors with a useful method for separating nonlease components from lease components. FASB Chairman Russell G. Golden says, “The proposed ASU is aimed at reducing unnecessary costs around implementation of the new Leases standard without compromising the ultimate quality of information provided to investors. It’s part of our ongoing effort to proactively address implementation issues raised by our stakeholders to ensure a successful transition to the new standard.”

The proposed ASU is available on the FASB website at

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