On January 25, the FASB officially amended the new lease accounting standard, ASC 842, providing an optional practical expedient for transition. If elected, a preparer can continue to apply its current accounting policy to land easements existing before they implement ASC 842. Some preparers currently treat easements as leases, while others apply other topics such as Intangibles (ASC 350) or Property, Plant, & Equipment (Topic 360). The amendment is contained in Accounting Standards Update 2018-01.
If elected, existing land easements would not need to be reviewed to see if they meet the ASC 842 definition of a lease. This test will need to be done for easements entered into (or modified) after ASC 842 is implemented. Note that perpetual easements will never fit the definition of a lease, because a lease is defined as conveying the right to use an asset for a stated period of time. Disclosure of selecting this practical expedient is required.