KPMG Executive View  |  December 2018

New leases standard – Lessors

KPMG’s executive summary highlights key points for lessors applying the new leases standard. In addition to the accounting changes, there are organizational impacts that will need to be addressed.

Applicability

ASC 842 (ASU 2016-02, ASU 2018-01, ASU 2018-10, ASU 2018-11, ASU 2018-20)

  • All companies in the scope of ASC 842

Relevant dates

Mandatory effective dates and early adoption provisions:

Effective date: Public business entities and certain other entities*    All other entities
Annual periods – Fiscal years beginning after Dec. 15, 2018 Dec. 15, 2019
Interim periods – In fiscal years beginning after Dec. 15, 2018 Dec. 15, 2020
Early adoption allowed? Yes, all entities can adopt Topic 842 immediately Yes, all entities can adopt Topic 842 immediately
* (1) public business entities; (2) not-for-profits that have issued, or are conduit bond obligors for, securities that are traded, listed or quoted on an exchange or an over-the-counter market; and (3) employee benefit plans that file financial statements with the SEC.


Key impacts

  • Lessor accounting is not fundamentally changed, but important differences from ASC 840 (current US GAAP) exist
  • Key aspects of the lessor accounting guidance have been aligned with the guidance in ASC 606 (the new revenue standard)
  • Your customers will now be required to recognize all leases, including operating leases, with terms greater than 12 months on their balance sheets
  • Accounting systems, processes and control changes will likely be necessary to comply with the changes to lessor accounting and the increased lessor disclosure requirements
  • Lessors can choose between two transition methods, with additional practical expedients available

Report contents

  • In a snapshot
  • How could it impact your business?
  • Effective dates
  • The transition approach
  • Lessor accounting model substantially unchanged
  • Other key considerations
  • Key changes from current US GAAP
  • Other important changes

Related content

Also Filed Under
  • Leases
  • Reference Library