KPMG Executive View | September 2018

Topic 842: Equipment lessees

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


ASC 842 (ASU 2016-02ASU 2018-01ASU 2018-10ASU 2018-11ASU 2019-10)

  • 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, 2020

Interim periods – In fiscal years beginning after

Dec. 15, 2018

Dec. 15, 2021

Early adoption allowed?


* (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

  • Lessees will recognize all leases, including operating leases, with a term greater than 12 months on-balance sheet
  • Key balance sheet measures and ratios may change, IT systems may need to be upgraded or modified, and accounting processes and/or internal controls will need to be revised
  • Lessees can choose between two transition methods, with additional practical expedients available
  • Sale-leaseback accounting is substantially changed
  • Both qualitative and quantitative disclosures are expanded

Report contents

  • In a snapshot
  • Effective dates
  • The transition approach
  • Leases on-balance sheet
  • Other key considerations

Related content

KPMG’s Handbook: Leases



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