The Governmental Accounting Standards Board (GASB) released two statements that require TTU to track and report right to use assets for leases and Subscription Based Information Technology Arrangements (SBITAs).

GASB Statement No. 87, Leases, defines a lease as a contract that conveys control of the right to use another entity's nonfinancial asset (buildings, land, vehicles, and equipment) for a period of time. TTU may be a lessor or a lessee.

GASB Statement No. 96, SBITAs, establishes right to use subscription-based assets and defines a SBITA, similarly, as a contract that conveys control of the right to use another entity's IT software for a period of time.

Accounting Records

Accounting Services (AS) performs quarterly reviews of contracts and transactional data to identify contracts that qualify under GASB 87 or 96. In addition to identification, AS also does the following:

  • tracks qualifying contracts and payments in a lease monitoring software,
  • reclassifies transactions to appropriate account codes designated for GASB reporting, and
  • prepares reports at fiscal year-end to include in the University's financial statements.

AS utilizes specific account codes for transactions under contracts that must be included in financial reporting. Most transactions are recorded in account codes titled “fixed”, but certain transactions may need to be recorded separately.

  • Fixed costs are typically baseline rent or subscription costs (such as $1,000 rent per month).
  • Variable costs depend upon amount of usage, when that amount is not known ahead of time (such as $50 per number of users/logins each month).
  • Nonlease costs are pass through costs incidental to the contract (such as common area maintenance (CAM) fees).

The below table lists account codes utilized for revenue leases, expense leases, and SBITAs. The DMFR resource Account Code Descriptions provides descriptions in greater detail.

Account Codes (for use by Accounting Services)

Account Name Short Description
GASB 87 Revenue Leases(TTU is the lessor) 5N0047 OR GASB87 Lease Fixed Receipts Fixed rental revenues received by TTU.
5N0048 OR GASB87 Lease Variable Revenues variable in nature or increases to price based on an index.
5N0049 OR GASB87 Nonlease Revenues not related to the use of the space. (CAM, insurance, taxes, etc.)
GASB 87 Expense Leases (TTU is the lessee) 7J1087 CO RTU Real Property Fixed Fixed rental/lease payments.
Land, building, or space.
7G0088 RL RTU Real Property Variable Revenues variable in nature or increases to price based on an index.
7G0089 RL RTU Real Property Nonlease Expenses not related to the use of the specific space. (CAM, insurance, utilities, etc.)
7J1017 RL RTU Personal Property Fixed Fixed rental/lease payments.
Vehicle, equipment, etc.
7G0018 RL RTU Personal Property Variable Rental/lease payments variable in nature or increases to payments not defined in contract.
7G0019 RL RTU Real Property Variable Expenses not related to the direct use of the equipment. (Insurance, taxes, etc.)
GASB 96 SBITA Expenses 7J1036 CO RTU SBITA Implementation Costs for implementation of software before it "goes live".
7J1037 CO RTU SBITA Fixed Fixed subscription payments.
7G0038 RL RTU SBITA Variable Subscription payments variable in nature or increases to payments not defined in contract.
7G0039 RL RTU SBITA Nonlease Expenses related to the subscription that do not qualify as fixed or variable.

GASB 87 Qualifications

  • Contract for lease of land, building, space, vehicle, or equipment.
  • Lease term greater than 12 months including any renewal periods that are reasonably certain to occur.
  • At least one party does not have the right to cancel for convenience within 12 months.
  • Sum of base rent payments for the full term including any renewal periods is greater than $100,000 per item.

Lessee: Recognizes lease liability and right-to-use asset.

Lessor: Recognizes lease receivable and deferred inflow of resources.

GASB 96 Qualifications

  • Contract for non-perpetual IT software subscription.
  • Term greater than 12 months including any renewal periods that are reasonably certain to occur.
  • At least one party does not have the right to cancel for convenience within 12 months.
  • Sum of base subscription payments for the full term including any renewal periods is greater than $500,000.

Government entity (subscriber): Recognizes subscription liability and right-to-use asset.