Implementing new governmental accounting standards is always exciting, but due to the uniqueness of utilities and other public sector organizations, there may be uncertainty on how to proceed.
The newly issued implementation guide from the Governmental Accounting Standards Board (GASB) for Statement No. 87 Leases may contain information directly applicable to your situation. Interpretation guides are considered "Level B" GAAP under GASB standards. This category comprises GASB technical bulletins and implementation guides, as well as guidance from the AICPA that is cleared by GASB.
GASB 87 overview
Just to refresh the topic, GASB Statement No. 87 Leases defines a lease as “a contract that conveys control of the right to use another entity’s non-financial asset as specified in the contract for a period of time in an exchange or exchange-like transaction.” Generally, material contracts that meet the criteria in the previous sentence and span a period of greater than one year will find their way to the statement of net position as a long-term asset and liability. Search for “GASB 87” on bakertilly.com and you’ll find a wealth of articles, webinars and tools for the nitty-gritty of implementation. In this article, you’ll find information that will help you navigate the implementation guide.
What is in the guide?
The GASB Implementation Guide No. 2019-3 Leases, is effective for fiscal years beginning after June 15, 2021, and earlier if GASB Statement No. 87 has been implemented. Like other GASB implementation guides, it is part question and answer format on common and uncommon questions, sample note disclosures and some specific examples on application of the overall standard.
The GASB 87 implementation guide contains 13 major categories of discussion. Here’s a sample of what you’ll find:
Utility-specific questions and answers
Lease term and valuation questions and answers
Lease asset amortization
In addition, the leases implementation guide has sample note disclosures and detailed examples on:
Although the examples may not directly apply to your organization, they contain valuable detail on calculating a lease valuation that can be applied to many similar situations.
Using the guide
As the GASB 87 deadline looms, we hope this information will help you find answers to your questions in the GASB implementation guide and effectively implement the new lease standard.
For more information on this topic, or to learn how Baker Tilly power and utilities specialists can help, contact our team.
 GASB 87 need not be applied to contracts or transactions that are not material to the financial statements of your organization
 The implementation guide can be found at the GASB website - http://bit.ly/33FnCjg