GASB 87 for Airport Hangar Leases: What You Need to Know

GASB 87 did not change your hangar leases. It changed the paperwork behind them, and for operators with a lot of small leases, that turned out to be a bigger lift than most people expected.

If you run a municipal airport or any operation that reports under governmental accounting standards, GASB 87 changed how you have to account for the leases you already have.

This is a plain-English walk through what the standard does, which of your hangar leases it touches, and what you actually have to keep track of to survive an audit.

One note up front: this is general information, not accounting advice. Your auditor is the final word on how any of this applies to your books.

What GASB 87 Actually Changed

For years, governmental entities split leases into two buckets: operating leases and capital leases. Operating leases mostly stayed off the balance sheet. That distinction is gone.

GASB 87, effective for fiscal years beginning after June 15, 2021, established a single model based on a simple idea. A lease conveys the right to use an asset for a period of time in exchange for payment, and that right, and that obligation, belong on the financial statements. No more operating-versus-capital sorting.

For most airports, the important thing to understand is which side of the lease you are on. When you lease hangar or ground space to a tenant, you are the lessor. Under GASB 87, a lessor recognizes a lease receivable and a corresponding deferred inflow of resources at the start of a qualifying lease, then recognizes revenue over the lease term.

That is a meaningful shift from the way a lot of airports used to book hangar rent as it came in. The practical consequence is that every qualifying lease you hold is now an accounting object with a beginning value, a schedule, and a life of its own on your statements.

Which of Your Leases Qualify, and Which Get a Pass

Here is the part that saves hangar operators the most work: not every lease is in scope.

GASB 87 includes a short-term exception. A lease that, at its start, has a maximum possible term of 12 months or less, including any options to extend, is a short-term lease and does not get the receivable-and-deferred-inflow treatment. You recognize those payments as revenue as they come due, which is much closer to how airports handled things before.

For a hangar operation, that exception matters a lot, because a big share of your activity may already fall under it:

Nightly and transient bookings are short-term by nature and generally fall outside the recognition requirements.
True month-to-month arrangements, where neither party is committed beyond a short window, often qualify as short-term.
Longer annual and multi-year hangar and ground leases are the ones that pull you into full GASB 87 treatment.

So the first real task is not accounting at all. It is inventory. You cannot apply the standard correctly until you know, lease by lease, what the maximum term is, whether there are renewal or extension options that push it past 12 months, and how each one should be classified.

Remeasurement Is Where the Ongoing Work Lives

The initial classification is a one-time exercise. The part that never really ends is remeasurement.

Under GASB 87, certain events require you to go back and recalculate the lease. A modification to the terms, a change in the lease term, a renewal that gets exercised, a termination, all of these can trigger a remeasurement of the receivable and the deferred inflow.

For a portfolio of a few large leases, that is manageable. For a hangar operation with dozens or hundreds of tenants churning in and out, signing renewals, adjusting terms, and terminating early, the remeasurement events pile up quietly.

This is the trap. The standard is not hard to understand. It is hard to keep current. Every lease change that happens on the ramp is also an accounting event that has to make it back to the books, and if the person managing the hangars and the person managing the ledger are not looking at the same source of truth, things fall out of sync fast.

What an Auditor Is Going to Want to See

When audit season comes, the questions are predictable:

Can you produce a complete inventory of every lease?
For each one, can you show the term, the payment schedule, the classification, and the reasoning behind it?
When a lease was modified or terminated mid-year, is there a record of when it changed and how the remeasurement was handled?

Answering those questions well comes down to one thing: whether your lease records are complete, dated, and traceable. An auditable lease inventory is not a nice-to-have under GASB 87. It is the core deliverable.

Airports that keep this in scattered spreadsheets and filing cabinets tend to spend the run-up to the audit reconstructing history from memory, which is exactly when errors and omissions surface.

It is also worth knowing that GASB 87 does not sit alone. GASB 96 layers a parallel set of requirements onto subscription-based IT arrangements, so the software you use to run the airport may itself be in scope. And aeronautical leases can carry their own wrinkles under the standard's provisions, which is another reason to keep your auditor close on classification calls.

Making the Recordkeeping Survivable

None of this requires heroics. It requires a single, current, auditable record of every lease and every change to it.

The airports that handle GASB 87 well are not the ones with the smartest accountants. They are the ones where a lease signed at the counter automatically becomes a dated record with a term, a schedule, and a history that finance can actually see.

That is really the whole game:

Keep one source of truth for leases.
Capture every modification and termination with a date attached.
Make it exportable when the auditor asks.

Do that, and GASB 87 goes from a scramble to a report you run.

If your lease records currently live across a few spreadsheets and a shared drive, consolidating them into one system with a real audit trail is the single highest-value move you can make. It is part of why we built lease management the way we did in the Hangar Direct platform, where every lease, renewal, and change is captured with a date so the history is there when someone needs it.

But the principle holds no matter what tools you use: get your leases into one place you trust, and keep it current.