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ASC 842 for equipment lessees

KPMG Executive View | December 2021

Updated: An executive level overview of the new lease accounting standard for equipment lessees.

Our executive summary highlights key accounting changes and organizational impacts for lessees applying ASC 842.

Applicability

  • Lessees in the scope of ASC 842

Relevant dates

Effective datePublic entities and certain other entities*Public NFPs**All other entities

Annual periods – Fiscal years beginning after

Dec 15, 2018

Dec 15, 2019

Dec 15, 2021

Interim periods – In fiscal years beginning after 

Dec 15, 2018

Dec 15, 2019

Dec 15, 2022

Early adoption allowed in fiscal years beginning after

N/A

Yes

Yes

* Includes (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 (‘Public NFPs’); and (3) employee benefit plans that file financial statements with the SEC.

** That had not issued GAAP-compliant financial statements reflecting the adoption of ASC 842 before June 3, 2020.

Key Impacts:

Resource
Handbook: Leases
Latest edition: Our in-depth guide to ASC 842 – with Q&As, interpretive guidance and examples.
  • 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

Download the document:

Executive Summary

Topic 842: Equipment lessees

Download PDF

Accounting Research Online

Access our accounting research website for additional resources for your financial reporting needs.

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