(GASB 95: Paragraphs 4, 4c,5 & GASB 87: Paragraph 93): 
4. The requirements of the following Statements and Implementation Guides are effective as indicated:
c. Statement 87 and Implementation Guide 2019-3---fiscal years beginning after June 15, 2021.

5. Earlier application of the provisions in paragraph 4 is encouraged and is permitted to the extent specified in each pronouncement as originally issued.

93. Changes adopted to conform to the provisions of this Statement should be applied retroactively by restating financial statements, if practicable, for all prior periods presented. If restatement for prior periods is not practicable, the cumulative effect, if any, of applying this Statement should be reported as a restatement of beginning net position (or fund balance or fund net position, as applicable) for the earliest period restated.

(GASB 96: Paragraphs 62-63):
62. The requirements of this Statement are effective for fiscal years beginning after June 15, 2022, and all reporting periods thereafter. Earlier application is encouraged.

63. Changes adopted to conform to the provisions of this Statement should be applied retroactively by restating financial statements, if practicable, for all prior fiscal years presented. If restatement for prior fiscal years is not practicable, the cumulative effect, if any, of applying this Statement should be reported as a restatement of beginning net position (or fund balance or fund net position, as applicable) for the earliest fiscal year restated. In the first fiscal year that this Statement is applied, the notes to financial statements should disclose the nature of the restatement and its effect. Also, the reason for not restating prior fiscal years presented should be disclosed.

(GASB 94: Paragraphs 84-85):
84. The requirements of this Statement are effective for fiscal years beginning after June 15, 2022, and all reporting periods thereafter. Earlier application is encouraged.

85. Changes adopted to conform to the provisions of this Statement should be applied retroactively by restating financial statements, if practicable, for all prior fiscal years presented. If restatement for prior fiscal years is not practicable, the cumulative effect, if any, of applying this Statement should be reported as a restatement of beginning net position for the earliest fiscal year restated. Also, the reason for not restating prior fiscal years presented should be disclosed. In the first fiscal year that this Statement is applied, the notes to financial statements should disclose the nature of the restatement and its effect.

1. Go to Administration/GL Accounts, under the heading Existing Balances under Previous Lease Accounting Guidance add Prepaid Expense GL account (or modify default Prepaid Rent (Asset) GL Account)

2. Go to Add Lease screen to enter your lease or go to My Leases and edit the lease (if the lease was previously added)

3. In Add/Edit Lease, select the tab “Lease Payments,” and go to the section “Existing Balances under Previous Lease Accounting Guidance”

4. Select the Prepaid Expense GL Account from the dropdown and enter the existing balance as a positive value and save your lease:

Open

After completion of the steps above, upon initial application of GASB 87 or GASB 96, the opening journal entry for this lease will remove your existing balance under previous lease accounting guidance with an offset to the Lease Asset:
Dr. Lease Asset (GL#210)                                                         $50,000*
            Cr. Lease Liability (GL#220)                                                               $50,000
Dr. Lease Asset (GL#210)                                                         $3,000*
            Cr. Prepaid Asset (GL#500)                                                                  $3,000         

*In this example, the Lease Asset is calculated to be $50,000 under the new lease accounting guidance.  An additional $3,000 of Lease Asset is recognized in the journal entry to remove the prepaid expense balance under previous lease accounting guidance.

Because the following journal entry does not impact ongoing lease accounting entries, you can book it outside or within LeaseCrunch. 

Remove your existing balances with a journal entry outside of LeaseCrunch:
Dr. Capital Lease Liability (GL#720)                                              $51,000
            Cr. Capital Lease Asset (GL#710)                                                          $48,000
   Cr. Net Position (GL#1000)                                                                  $3,000

Remove your existing balances with a journal entry in LeaseCrunch by following these steps:

1. Go to Administration/GL Accounts, under the heading Existing Balances under Previous Lease Accounting Guidance add Net Position, Capital Asset and Capital Liability GL Accounts

2. Go to Add Lease screen to enter your lease or go to My Leases and edit the lease (if the lease was previously added)

3. In Add/Edit Lease, select the tab “Lease Payments,” and go to the section “Existing Balances under Previous Lease Accounting Guidance”

4. Select each GL Account from the dropdown and enter the existing balance as a positive value and save your lease.

Open

After completion of the steps above, upon initial application, the opening journal entry for this lease will remove your existing balance under previous lease accounting guidance with an offset to Net Position:

Dr. Capital Lease Liability (GL#720)                                              $51,000
            Cr. Capital Lease Asset (GL#710)                                                          $48,000
   Cr. Net Position (GL#1000)                                                                  $3,000

(GASB 87: Paragraphs 37-39):
37. A lessee should disclose the following about its lease activities (which may be grouped for purposes of disclosure), other than short-term leases:

a. A general description of its leasing arrangements, including (1) the basis, terms, and conditions on which variable payments not included in the measurement of the lease liability are determined and (2) the existence, terms, and conditions of residual value guarantees provided by the lessee not included in the measurement of the lease liability
b. The total amount of lease assets, and the related accumulated amortization, disclosed separately from other capital assets
c. The amount of lease assets by major classes of underlying assets, disclosed separately from other capital assets
d. The amount of outflows of resources recognized in the reporting period for variable payments not previously included in the measurement of the lease liability
e. The amount of outflows of resources recognized in the reporting period for other payments, such as residual value guarantees or termination penalties, not previously included in the measurement of the lease liability
f. Principal and interest requirements to maturity, presented separately, for the lease liability for each of the five subsequent fiscal years and in five-year increments thereafter
g. Commitments under leases before the commencement of the lease term
h. The components of any loss associated with an impairment (the impairment loss and any related change in the lease liability, as discussed in paragraph 34).

38. A lessee also should provide relevant disclosures for the following transactions, if applicable:
a. Sublease transactions (see paragraph 81)
b. Sale-leaseback transactions (see paragraph 85)
c. Lease-leaseback transactions (see paragraph 87).

39. A lessee is not required to disclose collateral pledged as a security for a lease (under paragraph 113 of Statement 62) if that collateral is solely the asset underlying the lease.

(GASB 87: Paragraphs 57-58):
57. A lessor should disclose the following about its lease activities (which may be grouped for purposes of disclosure), other than short-term leases and certain regulated leases:
a. A general description of its leasing arrangements, including the basis, terms, and conditions on which any variable payments not included in the measurement of the lease receivable are determined
b. The total amount of inflows of resources (for example, lease revenue, interest revenue, and any other lease-related inflows) recognized in the reporting period from leases, if that amount cannot be determined based on the amounts displayed on the face of the financial statements
c. The amount of inflows of resources recognized in the reporting period form variable and other payments not previously included in the measurement of the lease receivable, including inflows of resources related to residual value guarantees and termination penalties
d. The existence, terms, and conditions of options by the lessee to terminate the lease or abate payments if the lessor government has issued debt for which the principal and interest payments are secured by the lease payments.

58. A lessor also should provide relevant disclosures for the following transactions, if applicable:
a. Leases of assets that are investments (see paragraph 41)
b. Certain regulated leases (see paragraph 60)
c. Sublease transactions (see paragraph 81)
d. Sale-leaseback transactions (see paragraph 85)
e. Lease-leaseback transactions (see paragraph 87).

59. In addition to the disclosures in paragraphs 57 and 58, if a lessor’s principal ongoing operations consist of leasing assets to other entities, the government should disclose a schedule of future payments that are included in the measurement of the lease receivable, showing principal and interest separately, for each of the five subsequent fiscal years and in five-year increments thereafter.

(GASB 96: Paragraphs 60-61):
60. A government should disclose in notes to financial statements the following information about its SBITAs (which may be grouped for purposes of disclosure) other than short-term SBITAs:

a. A general description of its SBITAs, including the basis, terms, and conditions on which variable payments not included in the measurement of the subscription liability are determined
b. The total amount of subscription assets, and the related accumulated amortization, disclosed separately from other capital assets
c. The amount of outflows of resources recognized in the reporting period for variable payments not previously included in the measurement of the subscription liability
d. The amount of outflows of resources recognized in the reporting period for other payments, such as termination penalties, not previously included in the measurement of the subscription liability
e. Principal and interest requirements to maturity, presented separately, for the subscription liability for each of the five subsequent fiscal years and in five-year increments thereafter
f. Commitments under SBITAs before the commencement of the subscription term
g. The components of any loss associated with an impairment (the impairment loss and any related change in the subscription liability, as discussed in paragraph 41).

61. For disclosure purposes, subscription liabilities are not considered debt that is subject to the disclosure requirements in Statement No. 88, Certain Disclosures Related to Debt, including Direct Borrowings and Direct Placements.

(GASB 94: Paragraphs 57-59):
57. An operator should disclose the following about its PPP activities (which may be grouped for purposes of disclosure):
a. A general description of its PPP arrangements, including the status of projects during the construction period, if applicable, and the basis, terms, and conditions on which any variable payments not included in the measurement of the liability for installment payments are determined
b. The nature and amounts of assets, liabilities, and deferred outflows of resources related to PPPs that are recognized in the financial statements
c. The discount rate or rates applied to the measurement of the liability for installment payments, if any
d. Principal and interest requirements to maturity, presented separately, for the liability for installment payments for each of the five subsequent fiscal years and in five-year increments thereafter
e. The amount of outflows of resources recognized in the reporting period for variable payments not previously included in the measurement of the liability for installment payments
f. The nature and extent of rights granted to the operator or retained by the transferor under PPP arrangements
g. The components of any loss associated with an impairment (the impairment loss and any related change in the liability, as discussed in paragraph 52).

58. For disclosure purposes, an operator’s liability for installment payments is not considered debt that is subject to the disclosure requirements of Statement No. 88, Certain Disclosures Related to Debt, including Direct Borrowings and Direct Placements.

59. Some PPP arrangements may include provisions for guarantees and commitments. For each period in which a guarantee or commitment exists, disclosures should be made about the guarantees and commitments, including identification, duration, and significant contract terms.

(GASB 94: Paragraphs 35-36):
35. A transferor should disclose the following about its PPP activities (which may be grouped for purposes of disclosure):
a. A general description of its PPP arrangements, including the status of projects during the construction period, if applicable, and the basis, terms, and conditions on which any variable payments not included in the measurement of the receivable for installment payments are determined
b. The nature and amounts of assets and deferred inflows of resources related to PPPs that are recognized in the financial statements
c. The discount rate or rates applied to the measurement of the receivable for installment payments, if any
d. The amount of inflows of resources recognized in the reporting period for variable and other payments not previously included in the measurement of the receivable for installment payments, including inflows of resources related to residual value guarantees and termination penalties
e. The nature and extent of rights retained by the transferor or granted to the operator under the PPP arrangements.

36. Some PPP arrangements may include provisions for guarantees and commitments. For each period in which a guarantee or commitment exists, disclosures should be made about the guarantees and commitments, including identification, duration, and significant contract terms.

(GASB 87: Paragraph 12, 94):
12. The lease term is the period during which a lessee has a noncancelable right to use an underlying asset (referred to as the noncancelable period).

94. Leases should be recognized and measured using the facts and circumstances that existed at the beginning of the period of implementation. If applied to earlier periods, leases should be recognized and measured using the facts and circumstances that existed at the beginning of the earliest period restated.

(GASB 96: Paragraph 9, 64): 
9. The subscription term is the period during which a government has a noncancellable right to use the underlying IT assets (referred to as the noncancelable period).

64. Assets and liabilities resulting from SBITAs should be recognized and measured using the facts and circumstances that existed at the beginning of the fiscal year in which this Statement is implemented. If applied to earlier fiscal years, those assets and liabilities should be recognized and measured using the facts and circumstances that existed at the beginning of the earliest fiscal year restated. Governments are permitted, but are not required, to include in the measurement of the subscription asset capitalizable outlays associated with the initial implementation stage and the operation and additional implementation stage incurred prior to the implementation of this Statement

(GASB 94: Paragraph 10, 86): 

10. The PPP term is the period during which an operator has a noncancellable right to use an underlying PPP asset (referred to as the noncancellable period).

86. PPPs should be recognized and measured using the facts and circumstances that existed at the beginning of the fiscal year of implementation. If applied to earlier fiscal years, PPPs should be recognized and measured using the facts and circumstances that existed at the beginning of the earliest fiscal year restated.

(GASB 87: Paragraphs 12-13): 
12. The lease term is the period during which a lessee has a noncancelable right to use an underlying asset (referred to as the noncancelable period), plus the following periods, if applicable:

a. Periods covered by a lessee's option to extend the lease if it is reasonably certain, based on all relevant factors, that the lessee will exercise that option
b. Periods covered by a lessee's option to terminate the lease if it is reasonably certain, based on all relevant factors, that the lessee will not exercise that option
c. Periods covered by a lessor's option to extend the lease if it is reasonably certain, based on all relevant factors, that the lessor will exercise that option
d. Periods covered by a lessor's option to terminate the lease if it is reasonably certain, based on all relevant factors, that the lessor will not exercise that option.

13. A fiscal funding or cancellation clause allows governmental lessees to cancel a lease, typically on an annual basis, if the government does not appropriate funds for the lease payments. This type of clause should affect the lease term only if it is reasonably certain that the clause will be exercised.

(GASB Implementation Guide No.2019-3 4.15): Paragraph 12 of Statement 87 requires that periods for which both the lessee and the lessor have an option to terminate the lease without permission from the other party be excluded from the lease term.

(GASB 96: Paragraphs 9-10):
9. The subscription term is the period during which a government has a noncancellable right to use the underlying IT assets (referred to as the noncancelable period), plus the following periods, if applicable:

a. Periods covered by a government’s option to extend the SBITA if it is reasonably certain, based on all relevant factors, that the government will exercise that option
b. Periods covered by a government’s option to terminate the SBITA if it is reasonably certain, based on all relevant factors, that the government will not exercise that option
c. Periods covered by a SBITA vendor’s option to extend the SBITA if it is reasonably certain, based on all relevant factors, that the SBITA vendor will exercise that option
d. Periods covered by a SBITA vendor’s option to terminate the SBITA if it is reasonably certain, based on all relevant factors, that the SBITA vendor will not exercise that option.

Periods for which both the government and the SBITA vendor have an option to terminate the SBITA without permission from the other party (or if both parties have to agree to extend) are cancellable periods and are excluded from the subscription term. For example, a rolling month-to-month SBITA, or a SBITA that continues into a holdover period until a new SBITA contract is entered into, would not be enforceable if both the government and the SBITA vendor have an option to terminate and, therefore, either could cancel the SBITA at any time. Provisions that allow for termination of a SBITA as a result of either payment of all sums due or default on subscription payments are not considered termination options.

10. A fiscal funding or cancellation clause allows a government to cancel a SBITA, typically on an annual basis, if the government does not appropriate funds for the subscription payments. That type of clause should affect the subscription term only if it is reasonably certain that the clause will be exercised.

(GASB 94: Paragraphs 10-11):
10. The PPP term is the period during which an operator has a noncancellable right to use an underlying PPP asset (referred to as the noncancellable period), plus the following periods, if applicable:
a. Periods covered by an operator’s option to extend the PPP if it is reasonably certain, based on all relevant factors, that the operator will exercise that option
b. Periods covered by an operator’s option to terminate the PPP if it is reasonably certain, based on all relevant factors, that the operator will not exercise that option
c. Periods covered by a transferor’s option to extend the PPP if it is reasonably certain, based on all relevant factors, that the transferor will exercise that option
d. Periods covered by a transferor’s option to terminate the PPP if it is reasonably certain, based on all relevant factors, that the transferor will not exercise that option.

Periods for which both the operator and the transferor have an option to terminate the PPP without permission from the other party (or if both parties have to agree to extend) are cancellable periods and are excluded from the PPP term. For example, a PPP that continues into a holdover period until a new PPP arrangement is entered into, would not be enforceable if both the operator and the transferor have an option to terminate and, therefore, either could cancel the PPP at any time. Provisions that allow for termination of a PPP due to either payment of all sums due or default on payments are not considered termination options.

11. A fiscal funding or cancellation clause allows an operator to cancel a PPP, typically on an annual basis, if the operator does not appropriate funds for the PPP payments. That type of clause should affect the PPP term only if it is reasonably certain that the clause will be exercised.

(GASB 87: Paragraphs 12-13, 16): 
12. The lease term is the period during which a lessee has a noncancelable right to use an underlying asset (referred to as the noncancelable period), plus the following periods, if applicable:

a. Periods covered by a lessee's option to extend the lease if it is reasonably certain, based on all relevant factors, that the lessee will exercise that option
b. Periods covered by a lessee's option to terminate the lease if it is reasonably certain, based on all relevant factors, that the lessee will not exercise that option
c. Periods covered by a lessor's option to extend the lease if it is reasonably certain, based on all relevant factors, that the lessor will exercise that option
d. Periods covered by a lessor's option to terminate the lease if it is reasonably certain, based on all relevant factors, that the lessor will not exercise that option.

13. A fiscal funding or cancellation clause allows governmental lessees to cancel a lease, typically on an annual basis, if the government does not appropriate funds for the lease payments. This type of clause should affect the lease term only if it is reasonably certain that the clause will be exercised.

16. A short-term lease is a lease that, at the commencement of the lease term, has a maximum possible term under the lease contract of 12 months (or less), including any options to extend, regardless of their probability of being exercised. For a lease that is cancelable by either the lessee or the lessor, such as a rolling month-to-month lease or a year-to-year lease, the maximum possible term is the noncancelable period, including any notice periods.

(GASB Implementation Guide No.2019-3 4.15): Paragraph 12 of Statement 87 requires that periods for which both the lessee and the lessor have an option to terminate the lease without permission from the other party be excluded from the lease term.

(GASB 96: Paragraphs 9-10, 14):
9.The subscription term is the period during which a government has a noncancellable right to use the underlying IT assets (referred to as the noncancelable period), plus the following periods, if applicable:

a. Periods covered by a government’s option to extend the SBITA if it is reasonably certain, based on all relevant factors, that the government will exercise that option
b. Periods covered by a government’s option to terminate the SBITA if it is reasonably certain, based on all relevant factors, that the government will not exercise that option
c. Periods covered by a SBITA vendor’s option to extend the SBITA if it is reasonably certain, based on all relevant factors, that the SBITA vendor will exercise that option
d. Periods covered by a SBITA vendor’s option to terminate the SBITA if it is reasonably certain, based on all relevant factors, that the SBITA vendor will not exercise that option.

Periods for which both the government and the SBITA vendor have an option to terminate the SBITA without permission from the other party (or if both parties have to agree to extend) are cancellable periods and are excluded from the subscription term. For example, a rolling month-to-month SBITA, or a SBITA that continues into a holdover period until a new SBITA contract is entered into, would not be enforceable if both the government and the SBITA vendor have an option to terminate and, therefore, either could cancel the SBITA at any time. Provisions that allow for termination of a SBITA as a result of either payment of all sums due or default on subscription payments are not considered termination options.

10. A fiscal funding or cancellation clause allows a government to cancel a SBITA, typically on an annual basis, if the government does not appropriate funds for the subscription payments. That type of clause should affect the subscription term only if it is reasonably certain that the clause will be exercised.

14. A government should recognize short-term subscription payments as outflows of resources (for example, expense) based on the payment provisions of the SBITA contract.

(GASB 94: Paragraphs 10-11):
10. The PPP term is the period during which an operator has a noncancellable right to use an underlying PPP asset (referred to as the noncancellable period), plus the following periods, if applicable:
a. Periods covered by an operator’s option to extend the PPP if it is reasonably certain, based on all relevant factors, that the operator will exercise that option
b. Periods covered by an operator’s option to terminate the PPP if it is reasonably certain, based on all relevant factors, that the operator will not exercise that option
c. Periods covered by a transferor’s option to extend the PPP if it is reasonably certain, based on all relevant factors, that the transferor will exercise that option
d. Periods covered by a transferor’s option to terminate the PPP if it is reasonably certain, based on all relevant factors, that the transferor will not exercise that option.

Periods for which both the operator and the transferor have an option to terminate the PPP without permission from the other party (or if both parties have to agree to extend) are cancellable periods and are excluded from the PPP term. For example, a PPP that continues into a holdover period until a new PPP arrangement is entered into, would not be enforceable if both the operator and the transferor have an option to terminate and, therefore, either could cancel the PPP at any time. Provisions that allow for termination of a PPP due to either payment of all sums due or default on payments are not considered termination options.

11. A fiscal funding or cancellation clause allows an operator to cancel a PPP, typically on an annual basis, if the operator does not appropriate funds for the PPP payments. That type of clause should affect the PPP term only if it is reasonably certain that the clause will be exercised.

Start Date: 1/5/2023
End Date: 1/4/2024
Term: 13 MonthsLease Asset Life: 12 Months (Defaults to Term -1)Amortization Expense over Term: $12,000