GASB 87 Lease Accounting Software: Abstract Every Government Lease Into the Fields the Standard Needs

What is GASB 87 lease accounting software?

GASB 87 lease accounting software is the tooling a state or local government uses to comply with GASB Statement No. 87, which requires almost every lease to be reported on the balance sheet. In practice the work splits in two. First, every lease has to be abstracted into structured fields: the lease term including options reasonably certain of exercise, the fixed and variable payments, and the discount rate. Second, an accounting engine turns those fields into the lease liability, the intangible right-to-use asset, the interest and amortization, and the note disclosures. Some platforms try to do both; the abstraction half is where implementations stall, because the fields have to be pulled out of the lease language accurately and tied back to the document for the audit. LeaseAbstractors does that first half fast and self-serve, then exports the fields into whatever engine books the entries. The field set overlaps heavily with what a private-company lease needs, which is why the same commercial lease abstract template works as a starting point.

Who has to comply with GASB 87?

State and local government reporting entities: states, cities, counties, public colleges and universities, school districts, transit authorities, public utilities, airports, and special districts. If you follow US GAAP as a private company or nonprofit, you report under ASC 842 instead, not GASB 87, and a lot of lease software only speaks one of the two standards. That distinction is a hard filter when you choose a tool, and it is the first thing to confirm. The full side-by-side is in GASB 87 vs ASC 842. GASB 87 has been effective for fiscal years beginning after June 15, 2021, so this is compliance work governments are already living with, not a future deadline.

What is the single model in GASB 87?

GASB 87 uses one lessee model for essentially every lease longer than short-term. There is no operating-versus-finance classification the way ASC 842 keeps for private companies. The government records a lease liability at the present value of the payments and an intangible right-to-use lease asset, then recognizes interest expense on the liability and amortizes the asset over the shorter of the lease term or the asset useful life. Many finance teams find the single model simpler to administer once the leases are abstracted, precisely because there is no classification test to defend. What it does not remove is the need for accurate term, payment, and rate fields on every lease, since those three inputs drive every number the single model produces.

What counts as a short-term lease under GASB 87?

A short-term lease has a maximum possible term of 12 months or less at commencement, including every option to extend, regardless of how likely each option is to be exercised. A short-term lease stays off the balance sheet: the government simply recognizes the payments as expense over the term. The trap is the "maximum possible term" wording, because a 6-month lease with two 6-month renewal options has a maximum possible term of 18 months and is not short-term, even if nobody expects to renew. Getting this test right on every lease is the first thing the abstraction settles, so leases that belong on the balance sheet are not missed.

How do I pick the discount rate for GASB 87?

Use the interest rate the lessor charges the lessee when that rate is readily determinable. When it is not, which is the common case, use the government incremental borrowing rate, meaning the rate the government would be charged to borrow, over a similar term, the amount needed to buy the asset. The rate matters because the whole liability is a present value, so a wrong rate misstates both the liability and the interest that runs off it for the life of the lease. Abstraction captures the rate stated in the lease where one exists and flags the leases where the government has to supply an incremental borrowing rate, so the accounting team knows exactly which leases need a rate decision.

What about GASB 96 and GASB 94?

GASB 87 has two siblings that governments implement alongside it. GASB 96 applies the same right-to-use logic to subscription-based information technology arrangements, so cloud and software subscriptions get a subscription liability and an intangible right-to-use subscription asset. GASB 94 covers public-private and public-public partnerships and availability payment arrangements. All three turn on the same core discipline: identify the arrangement, pull out the term, the payments, and the rate, and tie each to its source. A tool that abstracts leases cleanly gives you a head start on the SBITA and P3 populations too, because the fields and the review workflow are the same.

Is this a replacement for a GASB 87 accounting engine?

No, and it is worth being clear about it. LeaseAbstractors extracts the fields GASB 87 runs on; it does not produce the journal entries, the amortization schedules, or the note disclosures. Those come from your accounting platform. What it removes is the slowest, most error-prone step in front of that platform: reading hundreds of leases and keying the term, payments, and rate by hand, which is where most GASB 87 implementations lose their time and pick up their mistakes. Abstract the leases here, verify each field against its source page, then export into your engine. If you are still choosing an approach, the best lease abstraction software roundup and the prepare lease data walkthrough cover the options; the same critical date extraction keeps renewal and termination options from lapsing after the data is loaded.