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ARTICLE · 04 JUNE 2013

On the Horizon - May 21, 2013

Grant Thornton LLP
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Some leases impose requirements on a lessee to restore a facility to its original condition at the end of a lease or to uninstall and remove leasehold improvements.

United StatesAccounting and Audit
Grant Thornton'S Audit Practice Group
Grant Thornton'S Audit Practice Group
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CURRENT PRACTICE ISSUE

Asset retirement obligations in leasing arrangements

Some leases impose requirements on a lessee to restore a facility to its original condition at the end of a lease or to uninstall and remove leasehold improvements. The accounting for those obligations varies on their exact nature. Sometimes the obligation is considered to be part of minimum lease payments and is accounted for under FASB Accounting Standards Codification® (ASC) 840, Leases. When the obligation is not considered part of minimum lease payments, it may be an asset retirement obligation under ASC 410-20, Asset Retirement and Environmental Obligations: Asset Retirement Obligations.

Obligations included in minimum lease payments under ASC 840

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