The FASB issued ASU 2023-01 in response to feedback from private companies around the consideration of legal enforceability when leases were between entities under common control. It allows private companies and nonprofits without conduit debt to use the written terms and conditions for accounting for leases under common control. It also updates the accounting for leasehold improvements for all entities by requiring LHI’s to be amortized over their useful life. ASU 2023-01 is effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years.
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With over 15 years of experience in the accounting profession, Melisa Galasso designs and facilitates courses in advanced technical accounting and auditing topics, including not-for-profit and governmental accounting. She closely monitors regulatory bodies for changes in auditing and accounting guidance and serves as a subject matter expert in implementing the updated guidance.
Do you agree with the FASB’s decision to change leases this late in the adoption phase?
ASU 2023-01—Leases (Topic 842)—Common Control Arrangements (fasb.org)