GASB 87 implementation guide quick hits

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[1].

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[2]. 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

• Classification of easements (Question 4.5)
• Control of power plant as part of a purchased power agreement (Question 4.6)