Question

Go to the Financial Accounting Standards Board (FASB) website and locate the Accounting Standards Update (ASU) 2018-20 and ASU 2016-2. These two ASUs are about leases. Share what you initially find most interesting about these two ASUs in two separate postings.

Answer 1

ASU 2018-20: The thing that I found interesting about this ASU is that it looks into the matter of sales tax and other similar taxes collected from lessees. Lessors are now required to analyze sales tax and other similar taxes on a jurisdiction-by-jurisdiction basis. This will help them to determine if the taxes are the primary obligation of the lessor or not. The most interesting aspect of ASU 2018-20 for me is that it will, in all probability, reduce lessors' implementation and ongoing costs related to the new leases standard. Also lessors can systematically implement and apply lease standards without having to compromise on the information that has to be provided to the users of financial statements.

ASU 2016-2: The thing that I found interesting about this ASU is that it aims to increase the transparency as well as the level of comparability among organizations through recognition of lease assets and lease liabilities on balance sheet. Importantly the ASU 2016-2 will ensure that needs of the users of financial statements are met by making it necessary to provide faithful representation of leasing transactions.