GASB Statement No. 86: In-Substance Defeasance of Debt
Originally published on May 30, 2017
Updated on February 13th, 2024
The Governmental Accounting Standards Board (GASB) has detailed new guidance for in-substance defeasance of debt.
Statement No. 86, released on May 17, establishes that debt be considered defeased in substance (or removed from the balance sheet) when a government places cash and other monetary assets acquired with only existing resources in an irrevocable trust to extinguish the debt. The statement also requires that any remaining prepaid insurance related to the debt be included in the net carrying amount of that debt and establishes additional disclosure requirements.
The statement’s provisions take effect for reporting periods beginning after June 15, 2017; however, earlier adoption of these guidelines is encouraged. You can see the entire statement here.
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