Construction accounting update – New guidance addresses certain leasing arrangements

Description

Abstract: The Financial Accounting Standards Board (FASB) has issued new guidance that permits private companies following Generally Accepted Accounting Principles (GAAP) to, in some circumstances, elect not to consolidate the financial reporting from variable interest entities (VIEs) that lease property to them. This article explains how to determine whether an entity is a VIE and when a private company may elect an alternative not to apply the previously established GAAP VIE guidance to a lessor. However, a sidebar discusses certain disclosures that will still be required.