Insight
This Hot Topic compiles specific Questions on select Topic 842 implementation issues from KPMG Handbook, Leases, into one concise document to assist entities in their initial application of Topic 842.
Key considerations for public and private entity lessees when determining the discount rates for leases.
Key considerations for lessees when determining whether to elect – and how to apply – the short-term lease exemption.
This Hot Topic highlights important presentation and disclosure reminders under ASC 842 as companies prepare their year-end financial statements
The FASB staff has issued guidance that permits a simplified approach to accounting for COVID-19 related rent concessions – for lessees and lessors. KPMG answers questions about the application of this optional staff guidance.
The economic and financial markets effects of the COVID-19 pandemic may have a number of impacts on companies’ lease accounting under ASC 842. This article follows our recent Hot Topic on accounting for rent concessions resulting from the COVID-19 outbreak.
Applying ASC 842 to rent concessions arising from coronavirus and Hong Kong civil unrest related property closures.
This Hot Topic addresses a series of questions about lessors’ accounting for operating lease receivables after the adoption of Topic 842.
Previous Leases: Hot Topics
Suppliers (lessors) providing ‘free’ use of their equipment to facilitate sales of goods generally will need to allocate a portion of the consideration for goods sales to the ‘free’ lease.
Embedded leases in existing contracts may not have been identified;
companies need to look critically at their current lease population as
part of their adoption of Topic 842.
Fair market rent is an index; therefore, lease payments based on fair market rent are variable lease payments that depend on an index or rate.
Allocating variable lease payments to lease and non-lease components may be an unexpected challenge for many lessees.
New lease liabilities and ROU assets recognized in transition include the fixed payments required for all periods that are part of the ‘lease term’, which includes reasonably assured renewal periods.
Beware of the broad concept of a penalty under Topic 842 when considering the effect of termination rights on the lease term.
Companies should consider a number of factors before deciding whether to establish a lease recognition threshold and, if so, at what amount.
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