GASB 87 Lessor Lease Accounting Example

Let’s take as an example an 8-year office building lease. The first 2 years are at $10,000 per month, and the rent increases to $12,000 per month for the last 6 years. No services are provided to the lessee with the lease. Additional assumptions: The market value of the building is $1,500,000. These types of buildings typically have an economic life of 50 years. The unguaranteed residual value of the asset is $1,000,000. The lease is initiated and booked on July 1, 2022. Given the unguaranteed residual value, fair value and the payment stream is known the Implicit Rate will be computed. Download Now to access our full GASB 87 Lessor Lease Accounting Example.