Sales Taxes and
Other Similar Taxes Collected from Lessees
The amendments in this Update permit lessors,
as an accounting policy election, to not evaluate whether certain
sales taxes and other similar taxes are lessor costs (as described
in paragraph 842-10-15-30(b)) or lessee costs. Instead, those lessors
will account for those costs as if they are lessee costs. Consequently,
a lessor making this election will exclude from the consideration
in the contract and from variable payments not included in the consideration
in the contract all collections from lessees of taxes within the scope
of the election and will provide certain disclosures.
The amendments in this Update related to certain
lessor costs require lessors to exclude from variable payments, and
therefore revenue, lessor costs paid by lessees directly to third
parties from variable payments. The amendments also require lessors
to account for costs excluded from the consideration of a contract
that are paid by the lessor and reimbursed by the lessee as variable
payments. A lessor will record those reimbursed costs as revenue.
Variable Payments for Contracts with Lease and Nonlease Components
The amendments in this Update related to recognizing
variable payments for contracts with lease and nonlease components
require lessors to allocate (rather than recognize as
currently required) certain variable payments to the lease and nonlease
components when the changes in facts and circumstances on which the
variable payment is based occur. After the allocation, the amount
of variable payments allocated to the lease components will be recognized
as income in profit or loss in accordance with Topic 842, while the
amount of variable payments allocated to nonlease components will
be recognized in accordance with other Topics, such as Topic 606.
This Accounting Standards Update is the final
version of Proposed Accounting Standards Update 2018-260—Leases (Topic 842)—Narrow-Scope Improvements
for Lessors, which has been deleted.
Issued: December 10, 2018