Lease Accounting for Higher Education

Lease accounting for higher education will change under the new standards. Universities lease a diverse range of assets across real estate for dorms and classroom space as well as equipment for students and faculty to use, like IT assets.

The new leasing standards will require higher education institutions to update their accounting policies based on the new principles. In some cases, extensive analysis may be required to arrive at judgments on how to apply the standards to certain lease types.

Key Considerations

1. Which standard will your university need to report under? Public universities will likely report under GASB 87, while private university will report under FASB’s ASC 842.

2. What arrangements might qualify as on-balance sheet leases under the new accounting standards? Consider not only real estate leases like residence halls, but also equipment leases.

3. Which types of arrangements might qualify as embedded leases under the new standards? Consider complex arrangements with lessors that may contain multiple components for services and identifiable assets.

What the Experts Think

Links to Additional Resources

Managing lease accounting for public and private higher education

RSM's article covers what public and private higher education institutions should consider when adopting the new standards, whether they follow GASB or FASB rules.

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