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Reporting Requirements for Annual Financial Reports of State Agencies and Universities

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Reporting Requirements for Annual Financial Reports of State Agencies and Universities

Universities

Leases — Exceptions
Certain Regulated Leases

According to GASB 87, paragraph 42, regulated leases are those leases that are subject to external laws, regulations or legal rulings. For example, the U.S. Department of Transportation and the Federal Aviation Administration regulate aviation leases between airports and air carriers and other aeronautical users.

According to GASB 87, paragraph 43, lessor must recognize inflows of resources (for example, revenue) based on the payment provisions of the lease contract. Additionally, according to GASB 87, paragraph 60, the lessor must provide disclosures for leases to which external laws, regulations or legal rulings establish all of the following requirements:

  • Lease rates cannot exceed a reasonable amount, the reasonableness of which is subject to determination by an external regulator.
  • Lease rates must be similar for all lessees that are similarly situated.
  • The lessor cannot deny potential lessees the right to enter into leases if the facilities are available, provided that the lessee’s use of the facilities complies with generally applicable use restrictions.

For detailed lease note disclosure requirements, see Note 8 – Regulated Leases.

All agencies with regulated lease activity are required to use the LNSS web application to enter and certify disclosures

Lessors must not apply the provisions in GASB 87, paragraphs 44–59, to leases that meet the provisions provided in paragraph 43.