ASC 842, Leases – Transition disclosures

Filed Under: Leases, Presentation

KPMG illustrates SAB 74 example transition disclosures for adopting ASC 842. SEC Staff Accounting Bulletin 74 requires SEC registrants to evaluate new ASUs that they have not yet adopted to determine what financial statement disclosures to make about the potential material effects of adopting those ASUs.

Applicability

ASU 2016-02 and SEC Staff Accounting Bulletin 74

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

Relevant dates

Mandatory effective dates and early adoption provisions:

* (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

• SEC registrants are required to disclose the potential material effects of adopting new ASUs
• These disclosures generally should include a discussion about the effect that adoption is expected to have on the financial statements
• If the effect is not known or reasonably estimable, the company discloses that fact
• A company should describe its progress in implementing the new standards and the significant implementation matters that it still needs to address
• The SEC staff expects additional and more precise quantitative and qualitative information to be disclosed as the effective date approaches

Report contents

• Example transition disclosures for lessees and lessors

Related content

• Handbook: Leases