Proposed ASU 2020-700 — Leases (Topic 842): Targeted Improvements

Require lessors to classify and account for a lease with lease payments that are predominantly variable and do not depend on a reference index or a rate as an operating lease. When a lease is classified as operating, the lessor would not recognize a lease receivable, would not derecognize the underlying asset, and, therefore, would not recognize a selling profit or loss.

Provide lessees with the option to make an entity-wide accounting policy election to remeasure lease liabilities for changes in a reference index or a rate affecting future lease payments at the date that those changes take effect.

Exempt entities from applying modification accounting to the remaining lease components within a lease contract for transactions in which one or more lease components are terminated before the end of the lease term and that early termination does not economically affect the remaining lease components.