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Determining the Fair Value of the Underlying Asset by Lessors That Are Not Manufacturers or Dealers
The amendments in this Update reinstate the exception in Topic 842 for lessors that are not manufacturers or dealers. Specifically, those lessors will use their cost, reflecting any volume or trade discounts that may apply, as the fair value of the underlying asset. However, if a significant lapse of time occurs between the acquisition of the underlying asset and lease commencement, those lessors will be required to apply the definition of fair value (exit price) in Topic 820.
Presentation on the Statement of Cash Flows—Sales-Type and Direct Financing Leases
The amendments in this Update address the concerns of lessors within the scope of Topic 942 about where “principal payments received under leases” should be presented. Specifically, lessors that are depository and lending institutions within the scope of Topic 942 will present all “principal payments received under leases” within investing activities.
Transition Disclosures Related to Topic 250, Accounting Changes and Error Corrections
The amendments in this Update address those concerns by explicitly providing an exception to the paragraph 250-10-50-3 interim disclosure requirements in the Topic 842 transition disclosure requirements.
This Accounting Standards Update is the final version of Proposed Accounting Standards Update 2018–310—Leases (Topic 842)—Codification Improvements for Lessors, which has been deleted.
Accounting Standards Update 2019-01
Issued: March 05, 2019
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