Defining Issues | February 2016

FASB balloons balance sheet with new lease accounting standard

KPMG reports on ASC 842, which ends off-balance sheet lease treatment. The new leases standard may substantially increase reported assets and liabilities in accounting for leases across all industries.


ASU 2016-20

  • Company that is a lessee
  • Company that is a lessor

Effective dates

Mandatory effective dates and early adoption provisions:

Effective date:

Public business 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?


Key impacts

  • Lessees will recognize most leases on-balance sheet
  • New judgments are required to identify a lease
  • Lessee reassessments will require new processes and controls
  • Collectibility considerations and variable payments will affect lessors’ accounting in new ways
  • Fewer lease origination costs will be capitalizable by companies
  • Expanded quantitative and qualitative disclosures
  • Significant changes to sale-leaseback accounting will affect seller-lessees and buyer-lessors
  • Current build-to-suit lease guidance replaced

Report contents

  • Key impacts to lease accounting
  • Key differences between the new lease accounting standard and current US GAAP



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