Reporting Requirements for Annual Financial Reports of State Agencies and Universities

Notes & Samples

NOTE 8 – Leases/SBITAs
Lessees

If a lease is expected to be paid from general agency resources, the lease must be accounted for and reported on a basis consistent with governmental fund accounting principles.

General Disclosure

According to GASB 87, paragraph 37, the lessee must disclose the following about its lease activities (which may be grouped for purposes of disclosure) other than short-term leases:

• A general description of its leasing arrangements, including the:
  • Basis, terms and conditions on which variable payments not included in the measurement of the lease liability are determined
    –AND–
  • Existence, terms and conditions of residual value guarantees provided by the lessee not included in the measurement of the lease liability.
• The total amount of lease assets (and the related accumulated amortization) is disclosed separately from other capital assets. (Disclosed in Note 2)
• The variable lease payments recognized during the reporting period that are not included in lease liability.
• Any residual value guarantees that are not included in the lease liability, including the terms and conditions of the guarantees.
• The present maturity analysis of lease liability balances:
  • Payments for each of the first five years
  • Payments in five-year increments thereafter
  • Disclose principal and interest separately
• The lease commitments (other than short-term leases) for which the lease term has not yet begun.
• The components of any loss associated with an impairment (gross impairment loss less any related change in lease liability).

According to GASB 62, paragraph 113, the lessee is not required to disclose collateral pledged as a security for a lease if that collateral is solely the asset underlying the lease.

Note: Agencies are required to submit changes in leases through the LNSS web application.

Other Disclosures

See Leases — Special Transactions.

Subleases

According to GASB 87, paragraph 81, the original Lessee (now the lessor in the sublease) must disclose the:

• Sublease in the disclosure of the general description of lease arrangements.
• Lessor transactions related to subleases disclosed separately from the lessee transactions related to original leases.

Sale Leaseback

According to GASB 87, paragraph 82-86, the seller-lessee must disclose the terms and conditions of sale leaseback transactions in addition to general disclosures of lease arrangements.

Lease Leaseback

According to GASB 87, paragraph 87, both parties must disclose the gross amount of the lease and leaseback separately in their notes to the financial statements.