Under GASB 87, the identification of a short-term lease hinges entirely on the length of the maximum possible
noncancelable lease term.
The lease term is defined as the
noncancelable period of the lease under ASC 842-10-30-1 together with:
Both Salesforce and NetSuite state in the disclosure notes to their Summaries of Significant Accounting Policies that they currently capitalize sales commissions and amortize them over the
noncancelable terms of customer contracts, but do not provide a detailed breakdown of their cost of revenues.
CXW was awarded a 20-year
noncancelable lease agreement by the State of Kansas in January 2018 to build a 400,000 square foot correctional facility to replace the state's existing facility, indicative of incremental demand and increased creativity on behalf of states to address their correction needs.
These
noncancelable features can be particularly onerous on borrowers, so they are allowed to enter into a defeasance transaction.
FAS 13 specifies that if one of the following four criteria are met for a
noncancelable lease at the date of the lease agreement, the lease is to be accounted for as a capital lease: (i) the lease transfers ownership of the property to the lessee by the end of the lease term; (ii) the lease contains a bargain purchase option; (iii) the lease term is equal to 75% or more of the estimated economic life of the leased property; and (iv) the present value of the minimum lease payments (excluding executor costs) equals or exceeds 90% of the fair value of the leased property.
Under the 2013 ED, lease term would include all
noncancelable periods and all renewal or termination options in which the lessee has a significant economic incentive to exercise.
Your coverage is
Noncancelable and Guaranteed Renewable to age 65.
Under this proposal, a private company would have the option not to recognize an intangible asset separate from goodwill, unless that asset arises from a
noncancelable contract or other legal right.