The Governmental Accounting Standards Board (GASB) has released proposed guidance meant to guide entities through implementing GASB Statement No. 87, Leases.

The proposed GASB guidance is in a question-and-answer format. For example, the first question addresses the case where a government leases land that has a market rent of $100,000 per year, for $1 per year. The guidance's answer says that "[t]he government’s lease of land for $1 does not meet the description of an exchange or exchange-like transaction in that each party does not receive or give up essentially equal value or not quite equal value," and so the guidance in the lease standard does not apply."

The GASB lease standard, which applies to state and local governments, is very similar to the one previously issued by the Financial Accounting Standards Board (FASB). As with the FASB rules, under the GASB lease standard, a lessee is required to recognize a lease liability and an intangible right-to-use lease asset, and a lessor is required to recognize a lease receivable and a deferred inflow of resources, thereby enhancing the relevance and consistency of information about governments’ leasing activities.

The deadline for submitting written comments on the proposed guidance is April 30, 2019. Comments should be addressed to the Director of Research and Technical Activities, Project No. 3-24, and emailed to director@gasb.org .