GASB 96 - Initial Measurement

To determine Subscription Liability and Subscription Asset amounts, organizations must first identify what is required for the calculations. The Subscription Liability is the present value of future payments. You must first identify what qualifies as a payment and then identify the discount rate. 

Payments

• Fixed Payments
• Variable payments that depend on an index or rate, measured using the index or rate as of the commencement of the term
• Variable payments that are fixed in substance
• Payments for penalties for terminating the SBITA if the government expects to execute an option to terminate or a fiscal funding or cancellation clause
• Subscription contract incentives receivable from the SBITA vendor
• Other Payments to the SBITA vendor associated with the SBITA contract that are reasonably certain of being required

Discount Rate

• The rate the SBITA vendor charges the government, which may be implicit
• If not implicit or readily determined, use the government's estimated incremental borrowing rate

Subscription Liability & Subscription Asset

To determine the Subscription Liability, use the discount rate to determine the present value of future lease payments.

Then use the Subscription Liability amount to determine the Subscription Asset amount as follows: