GASB 87 Disclosure Requirements Explained (Updated for 2026)

October 16, 2025

The Governmental Accounting Standards Board (GASB) is responsible for establishing financial reporting standards for state and local governments in the United States. One of the standards, GASB 87, introduced significant changes to the accounting and financial reporting of leases for governments in the past few years. This article will provide an overview of GASB 87 disclosure requirements and help you understand the implications for government entities.

GASB 87 Summary

GASB 87 was issued with the primary objective of improving the accounting and financial reporting of leases by governments. It establishes a single model for lease accounting, eliminating the distinction between operating and capital leases that existed under previous guidance. Under GASB 87, lessees (the government entity using the asset) are required to recognize a lease liability and an intangible right-to-use lease asset, while lessors (the entity that owns the asset) must recognize a lease receivable and a deferred inflow of resources.

For more background on GASB 87, see our guide to GASB 87 and its benefits here.

GASB 87 Effective Date

GASB 87 was originally slated to take effect in December 2019, but was delayed due to COVID-19. It has now been in effect since June 15, 2021. Due to the nature of fiscal calendars, this meant that 2022 was the first full year that government entities were under GASB 87.

What Leases Quality Under GASB 87?

Under GASB 87 disclosure requirements, a lease is any contract that:

1. Conveys control of the right to use another entity’s nonfinancial asset (the “underlying asset”),
2. For a period of time,
3. In an exchange or exchange-like transaction.
   1. The lessee must have both (a) the right to obtain present service capacity from the asset, and (b) the right to determine the nature and manner of use.
   2. The scope is nonfinancial assets (e.g. land, buildings, equipment, vehicles).

There are some additional inclusions, exclusions, and special cases, but the important takeaway is that not every lease-like agreement qualifies, so careful legal and accounting review is essential. Thankfully, lease accounting software like EZLease make it easy to ensure GASB 87 compliance so you can focus more on managing your portfolio of leases.

GASB 87 Disclosure Requirements for Lessees

GASB 87 requires lessees to disclose essential information about their leasing activities in the notes to the financial statements. The following are key disclosure requirements for lessees:

Leased Assets

Lessees must provide a description of the leasing arrangements, including the nature of the leased assets and any restrictions imposed by the lease agreements. They should also disclose information about the existence, terms, and conditions of options to extend or terminate the lease and any options to purchase the underlying asset.

Lease Liabilities

Lessees should disclose the total amount of lease liabilities, along with a maturity analysis that presents the undiscounted cash flows to meet the lease liabilities in each of the five subsequent fiscal years and in five-year increments thereafter. Additionally, lessees must disclose the discount rate used to determine the present value of lease payments.

Lease Expense

Lessees are required to disclose the total lease expense for the reporting period, including any short-term and variable lease payments recognized as expenses.

Qualitative Disclosures

In addition to the disclosures covered above, GASB 87 also requires lessees to explain certain aspects of their leases, such as:

• Residual value guarantees that are excluded from the lease liability
• Nature and extent of leases with related parties

While lease accounting software may not seem as pertinent for lessees, EZLease provides a place to upload or import their lease contracts into a single centralized system. It can also help flag missing fields or inconsistencies across terms (e.g. lease start, term, options, etc.) and more.

GASB 87 Disclosure Requirements for Lessors

Lessors also need to provide detailed information about their leasing activities in the notes to the financial statements. The following are key disclosure requirements for lessors:

Lease Receivables

Lessors should disclose a description of leasing arrangements, including the nature of the leased assets and any restrictions imposed by the lease agreements. They must also provide information about the existence, terms, and conditions of options to extend or terminate the lease and any options for the lessee to purchase the underlying asset.

Deferred Inflows of Resources

Lessors need to disclose the total amount of deferred inflows of resources related to leases. This is paired with a maturity analysis that presents the undiscounted cash flows to be received in each of the five subsequent fiscal years and in five-year increments thereafter.

Lease Revenue

Lessors are required to disclose the total lease revenue recognized for the reporting period, including any short-term and variable lease payments recognized as revenue.

Lease accounting platforms like EZLease are incredibly valuable for lessors, acting as a comprehensive module for all of your lessor accounting needs. It supports GASB 87’s requirements as well as automating receivables, deferred inflows, and revenue recognition. EZLease makes it easy to modify contracts, lease terms, and residual guarantees, while maintaining full historical tracking and audit trails of changes and adjustments. The platform offers far more functionality and benefits for lessors than those discussed in this article, so schedule a demo today to see how it can support your team.

GASB 87 Checklist

We’ve compiled a handy checklist of tasks that entities and businesses should consider for GASB 87 disclosure compliance:

• Inventory & Identification: Gather all lease and lease-like contracts across departments and screen each contract to determine whether it qualifies as a lease under the GASB 87 definition.
• Term & Options Analysis: Identify noncancelable lease term, renewal/extension options, termination options.
• Payment & Cash Flow Estimation: Determine fixed payments, variable payments tied to an index, residual guarantees, incentives, and penalties.
• Discount Rate: Select the appropriate discount rate (often the lessee’s incremental borrowing rate or a rate implicit in the lease, if known).
• Initial Recognition: Compute initial lease liability (present value of lease payments) and book the opening journal entry (asset/liability).
• Subsequent Accounting: Amortize the lease asset over the lease term or useful life (whichever is shorter), and remeasure lease liability when modifications, changes in term, or assessment of options occur.
• Disclosures & Reporting: Prepare required footnote disclosures (maturity schedules, discount rates, descriptions, expenses recognized).
• Comparatives & Transition: Restate prior periods presented (if practicable) under GASB 87 rules.
• Internal Controls & Audit Trail: Maintain documentation, audit trail, and internal review of judgments (discount rates, lease term, options).
• Ongoing Monitoring: Monitor for changes in lease terms, renewals, terminations, and variable lease payments.
• System & Tools: Establish a central lease repository, validations, automation, and reporting with a tool like EZLease.

Maintaining Compliance with GASB 87 Lease Accounting Software

Maintaining GASB 87 compliance is made easier with lease accounting software like EZLease. insightsoftware’s comprehensive lease accounting solution is designed to simplify and streamline your processes. EZLease is specifically tailored to address the unique requirements of GASB 87, ensuring that lessees and lessors accurately recognize lease assets, liabilities, and related financial statement disclosures. If you’re a finance team or corporate accountant looking for a fast and reliable tool that ensures audit-ready compliance, fill out the form below to get a free demo and trial of EZLease today: