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Lease & Subscription Accounting – GASB 87 & GASB 96

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Most organizations today leases equipment and subscribe to cloud and IT solutions. When the payments for lease or subscription services are expensed, there is little visibility into your schools’ obligations or liabilities.

With the release of the GASB 87 and GASB 96 statements, the Government Accounting Standards Board (GASB) sought consistency in accounting for payments for these services. Implementing these statements will enhance your financial statements’ relevance and reliability, and readers of your financial statements will better understand your schools’ obligations and assets.

GASB 87 – Leases

Reminder, effective for your Academy’s 2022 year-end, the Governmental Accounting Standards Board (GASB) Statement No. 87, Leases, as issued in June 2017. This Statement’s objective is to require recognition of certain lease assets and liabilities for leases that previously were classified as operating leases based on the payment provisions of the contract. It establishes a single lease accounting model that leases are financings of the right to use the underlying asset.

Under this Statement, a lessee is required to recognize a lease liability and an intangible right-to-use lease asset, recognize a lease receivable and a deferred inflow of resources on financial statements. Thereby enhancing the relevance and consistency of information about governments’ leasing activities.

Statement No. 87, Leases, along with any related implementation guides, has been postponed by 18 months until fiscal years beginning after June 15, 2021, or fiscal year 2022 for all June and September year-ends.

GASB 96 – Subscription‐based IT Arrangements

In May 2020, the Governmental Accounting Standards Board (GASB) issued Statement No. 96, Subscription‐based Information Technology Arrangements. The statement will be effective for the Academy’s 2023 year-end. Statement 96 provides guidance on the accounting and financial reporting for subscription-based information technology arrangements (SBITAs) for government end-users (governments).

This Statement (1) defines a SBITA; (2) establishes that a SBITA results in a right-to-use subscription asset – an intangible asset – and a corresponding subscription liability; (3) provides the capitalization criteria for outlays other than subscription payments, including implementation costs of a SBITA; and (4) requires note disclosures regarding a SBITA. To the extent relevant, the standards for SBITAs are based on the standards established in Statement No. 87, Leases, as amended.

Maner Costerisan’s Education group is monitoring GASB updates and crucial COVID responses. Please reach out to our team if you have any questions.



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