Leases - New Requirements

The Governmental Accounting Standards Board has issued Statement No. 87, Leases (GASB 87), which establishes a single model for lease accounting based on the principle that leases are financings of the right to use an asset.  There is no longer an operating versus capital classification. Lessees will recognize an intangible right-to-use asset and a lease liability. Lessors will recognize a lease receivable and a deferred inflow of resources. 

GASB 87 is effective for fiscal year 2022 and applies to leases of tangible capital assets—including buildings, land, and equipment. In addition, GASB Statement No. 96, Subscription-Based Information Technology Arrangements expanded the requirements effective beginning in fiscal year 2023.  More information will be forthcoming in the future for these types of arrangements.

The materiality threshold for GASB 87 leases has been established at $500,000 for the State of Arizona both as a lessee and lessor.

Required Action Items

Note: Even if the agency does not have any GASB 87 leases, the two Decision Forms are still required to be completed and submitted.  If the agency has no leases with outstanding payments as of 7/1/2021 of $100,000 or more, then please indicate on the form, “NONE” on cell C34 and return to the GAO email address at [email protected]. 

Agencies that submit audited financial statements prepared using the accrual basis of accounting to the GAO are not required to complete these forms.  However, these agencies may find the forms useful in preparing their own financial statements, so feel free to download and use them.

Different forms and templates will be provided to obtain the ending lease balances at 06-30-2022 at a later date.

Video Tutorials

GAO Guide & Resources

GASB Literature & Resources