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Leases (GASB 87)

Leases - New Requirements

The Governmental Accounting Standards Board has issued Statement No. 87, Leases (GASB 87), which establishes a single model for lease accounting based on the principle that leases are financings of the right to use an asset.  There is no longer an operating versus capital classification. Lessees will recognize an intangible right-to-use asset and a lease liability. Lessors will recognize a lease receivable and a deferred inflow of resources. 

GASB 87 is effective for fiscal year 2022 and applies to leases of tangible capital assets—including buildings, land, and equipment. In addition, GASB Statement No. 96, Subscription-Based Information Technology Arrangements expanded the requirements effective beginning in fiscal year 2023.  More information will be forthcoming in the future for these types of arrangements.

The materiality threshold for GASB 87 leases has been established at $500,000 for the State of Arizona both as a lessee and lessor.

Required Action Items

Beginning in fiscal year 2022, agencies must report all GASB 87 leases that meet the threshold to the GAO, Annual Comprehensive Financial Report (ACFR) Team. The AZ360 Financial Debt module will not be used to capture the GASB 87 lease information at this time. However, it is being evaluated for use in future years. Agencies will need to provide lease information for both the beginning balance at 07-01-2021 and ending balance at 06-30-2022. To establish the beginning balance of the GASB 87 leases for fiscal year 2022, agencies will need to complete the following forms and templates by 04-01-2022. The two Decision Forms are required to be filled out and returned by all agencies except those who prepare their own accrual-based audited financial statements. The two Collection Templates may or may not be required depending on the answers on the Decision Forms.

Document Name Description Last Updated
GASB 87 LESSEE Decision Form for Conversion

Designed to assist the agency with identifying GASB 87 payable leases.

GASB 87 LESSEE Collection Template for Conversion

Designed to capture GASB 87 payable leases’ information.

GASB 87 LESSOR Decision Form for Conversion

Designed to assist the agency with identifying GASB 87 receivable leases.

GASB 87 LESSOR Collection Template for Conversion

Designed to capture GASB 87 receivable leases’ information.


Note: Even if the agency does not have any GASB 87 leases, the two Decision Forms are still required to be completed and submitted.  If the agency has no leases with outstanding payments as of 7/1/2021 of $100,000 or more, then please indicate on the form, “NONE” on cell C34 and return to the GAO email address at [email protected]

Agencies that submit audited financial statements prepared using the accrual basis of accounting to the GAO are not required to complete these forms.  However, these agencies may find the forms useful in preparing their own financial statements, so feel free to download and use them.

Different forms and templates will be provided to obtain the ending lease balances at 06-30-2022 at a later date.

Video Tutorials

Videos are most effective as an interactive tool (i.e. watch while analyzing a lease contract and fill out the forms as progressing through the videos) rather than only watching and later filling out the forms.

GAO Guide & Resources

Document Name TraCorp Course Code Last Updated
GASB 87 Overview GASB87_GAO 04-29-2021
Lease Accounting Decision Tree 04-26-2021
GASB 87 Scope Guide 01-21-2021

GASB Literature & Resources