GASB 87 Lease - Lessor Revenue Recognition (Government as Landlord)
Recording lease receivable and deferred inflow when a government is the LESSOR of property (e.g., leasing city-owned space to a tenant or concessionaire) under GASB 87.
| Account Name | Type | Debit ($) | Credit ($) |
|---|---|---|---|
| Lease Receivable (Gov-Wide - Lessor) | Asset (+) | 480,000.00 | - |
| Deferred Inflows - Lease Revenue (Lessor) | Deferred Inflow (+) | - | 480,000.00 |
💡 Accountant's Note
Under GASB 87, when a government is the lessor, it records a Lease Receivable (the present value of future lease payments receivable) and a corresponding Deferred Inflow. The deferred inflow is recognized as revenue over the lease term as payments are received and/or as time passes. Unlike the lessee side, the lessor retains the underlying asset on its balance sheet (the leased property continues to be reported as a capital asset, just identified as 'being leased'). Common government lessor arrangements: airport concession leases, marina slip rentals, stadium leases, ground leases.
Practitioner & Systems Framework
💻 ERP Architecture
Track each lease receivable in the ERP with an amortization schedule showing the interest revenue component and principal reduction. The underlying capital asset (leased property) must continue to be depreciated and reported in the capital asset register with a notation that it is subject to a lease.
⚠️ Audit Flags
Governments often overlook their lessor position — particularly for informal space-sharing arrangements that constitute GASB 87 leases. Auditors request a listing of all arrangements where the government allows other entities to use government-owned space in exchange for consideration. The deferred inflow recognition pattern must be consistent with the lease payment schedule.
📄 Required Documentation
Lease agreement (government as lessor), lease receivable calculation (PV of future payments), deferred inflow amortization schedule, underlying capital asset identification in capital asset register, GASB 87 lessor note disclosures.
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