Upcoming GASB Pronouncements
By Sarah Stanley, CPA
While there were no significant Governmental Accounting Standards Board (GASB) updates for fiscal year end June 30, 2019, there are some upcoming GASB pronouncements that may need to be on your radar for fiscal year ends June 30, 2020 and June 30, 2021. These upcoming pronouncements are summarized below.
GASB Statement No. 90 Majority Equity Interests, an amendment to GASB No. 14 and No. 61, will be effective for year end June 30, 2020. The goal of the statement is to increase comparability and consistency of reporting on the majority equity interest of a separate legal entity presented as a component unit. It further clarifies what a majority interest is, and if it should be treated as an investment using the equity method.
GASB Statement No. 89 Accounting for Interest Cost Incurred Before the End of a Construction Period will be effective for year end June 30, 2021. The goal of the statement is to increase comparability of information related to capital assets and any related debt costs, as well as to clarify treatment of interest cost incurred before the construction period is over. Interest included in the new accounting requirement will include all interest cost previously accounted for under GASB Statement No. 62. Interest will now be expensed in the period incurred and not counted as part of the historical cost of a capital asset.
GASB No. 87 Leases will be effective for year end June 30, 2021. The goal of the statement is to improve information provided to financial statement users. It will create a new model for lease accounting, which is based on the idea that leases are the right to an asset through financing. Under the new model, a lessee will recognize a lease liability and an intangible asset for the right of asset use. A lessor will recognize a receivable and deferred inflow of resources. If the lease term is 12 months or less, this will not apply.
These are the GASB pronouncements on the horizon that may impact your financials over the next couple of years. If you have any questions about how they may specifically impact you, please reach out to your accounting and financial reporting advisor.