Get FASB: Summary Of Statement 13

FAS 131 Summary It also establishes standards for related disclosures about products and services, geographic areas, and major customers. This Statement supersedes FASB Statement No. 14, Financial Reporting for Segments of a Business Enterprise, but retains the requirement to report information about major customers.

FAS 13 is a set of rules and regulations developed by the Financial Accounting Standards Board (FASB). It is regulated on how leases are classified for GAAP and tax reporting purposes. The FAS13 test is used to submit the lease data to a series of calculations that are used to answer these questions.

ASC 842 lease accounting replaces the previous GAAP lease accounting standard, ASC 840, which classified certain leases as “operating leases,” which were not capitalized on the balance sheet.

GASB 13, “Accounting for Operating Leases with Scheduled Rent Increases,” provides accounting guidance for agreements that contain fixed increases (i.e. increases are contractual and are not driven by future contingent events).

Under the new standard, lessees are required to account operating leases with terms longer than 12 months on the balance sheet, resulting in the recognition of a right-of-use asset and the corresponding liability.

This Statement establishes standards of financial accounting and reporting for leases by lessees and lessors. For lessees, a lease is a financing transaction called a capital lease if it meets any one of four specified criteria; if not, it is an operating lease.

Effective date of ASC 842 for public companies For public companies, the FASB standard was effective for reporting periods beginning subsequent to December 15, 2018. For calendar year-end companies, this means the standard was adopted on January 1, 2019.

As part of the new lease accounting standard, FASB retained the FAS 13 (ASC842) framework for lease classification. The lessees expense accounting is identical to their historical accounting for a PTL Operating Lease on the income statement. The balance sheet will now include a right to use asset and a lease liability.