To the Point - FASB issues leases guidance for arrangements between entities under common control


Our publication summarizes the FASB’s amendments to ASC 842 to provide a practical expedient that allows private companies and certain not-for-profit entities to use the written terms and conditions of a common control arrangement (rather than the legally enforceable terms) to determine whether a lease exists and to classify and account for the lease. The amendments also require all lessees, including public business entities, to amortize leasehold improvements associated with common control leases over their useful life to the common control group and account for them as a transfer of assets between entities under common control at the end of the lease. The guidance is effective for fiscal years beginning after 15 December 2023, including interim periods within those fiscal years. Early adoption is permitted.

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