Common-control leasing arrangements – FASB offers a simpler reporting option

Description

Abstract: Under Generally Accepted Accounting Principles, dealerships that lease real estate or equipment from one or more owners may be subject to the consolidation requirements of variable interest entities (VIEs). But the consolidation of leasing entities can now be a thing of the past for qualifying privately held dealerships that elect an alternative reporting method. As this article explains, the Financial Accounting Standards Board has granted private companies the option to elect not to consolidate financial reporting from VIEs that lease property to them. There are certain conditions that must be met, but, in light of this simplified reporting option, some dealers might want to reconsider the benefits of common-control leasing arrangements.