FASB staff answers questions about delay in leases standard due to coronavirus
The Financial Accounting Standards Board staff released a question-and-answer document to respond to questions about the lease accounting guidance for lease concessions in the wake of the novel coronavirus pandemic.
The FASB staff noted that many lessors are, or will be, providing lease concessions to tenants affected by the economic disruptions caused by the COVID-19 pandemic. FASB said last week that it’s developing a proposal to delay the lease accounting standard for another year for private companies and nonprofits, although it’s already in effect for public companies (see our story).
FASB’s staff wrote the new Q&A to answer some questions about the new standard and to help navigate the guidance in this field. Among the issued highlighted, for concessions related to the effects of the COVID-19 pandemic, an entity won’t need to analyze each contract to determine whether enforceable rights and obligations for concessions exist in the contract and can elect to apply or not apply the lease modification guidance in Topic 842 Leases (or Topic 840 Leases) to those contracts. Another question deals with whether an entity needs to provide disclosures about lease concessions related to the effects of the COVID-19 pandemic. The answer, in short, is yes.
FASB and its staff are continuing to monitor the leasing area to decide whether to provide more clarification in the future. FASB also announced that its May 18 roundtable discussion on the leases standard will be postponed until a future date that’s yet to be determined. The delay will enable FASB and its staff to focus their resources on supporting stakeholders during the pandemic.