Does your unit pay for leases of non-financial assets such as buildings, land, vehicles, or equipment? If so, keep the following points in mind:
- Leases have the following characteristics:
- The lease terms do not convey ownership rights;
- The lease term, including renewal options, is greater than one year; and
- The total payments over the term of the lease agreement sum to a value greater than or equal to $5,000.
- All state/local government agencies (including public universities) are required to adhere to a lease accounting standard recently issued by the Governmental Accounting Standards Board (GASB), which requires lease payments to be broken out between principal and interest.
- It is also essential that the proper expense account codes are utilized for these lease payments, to ensure proper separation of principal and interest payments. For further details on these various lease expense account codes, refer to the Account Code Search webpage. Also, refer to one of our past lease account code announcements which touched on some of these lease account code updates and additions.
Contact
For further details, refer to the applicable subject matter experts within the Lease Accounting section of UAFR’s Who to Ask list.
