A guide to lessee accounting under ASC 842 assists middle-market lessees in applying the leases guidance in Topic 842, Leases, of the Financial Accounting Standards Board’s Accounting Standards Codification (ASC). The most significant change for lessees under ASC 842 is the recognition of ROU assets and lease liabilities by lessees for most leases, which RSM discusses and illustrates in detail in this US GAAP guide.
RSM comprehensive guide includes in-depth discussion and numerous examples on:
- The scope of ASC 842 and the definition of a lease
- The steps lessees should take in identifying the units of account present in a contract that includes a lease and allocating the contract consideration to those units of account
- The key inputs used by lessees in classifying and accounting for a lease, including the commencement date, the discount rate, the lease term and lease payments
- The lease classification criteria used by lessees to classify a lease as an operating lease or finance lease
- The initial and subsequent accounting by lessees for operating leases and finance leases, including specific issues such as evaluating ROU assets for impairment, applying ASC 842 to leases denominated in a foreign currency and recognizing leases acquired in business combinations and asset acquisitions
- The seller-lessee’s evaluation of and accounting for sale-leaseback transactions
- The lessee’s presentation of leases on its balance sheet, income statement and cash flows statement and the disclosures required of lessees under ASC 842
- The effective date of ASC 842 and the transition guidance that should be applied in the initial implementation of ASC 842
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