KPMG Executive View | July 2020



ASC 842 for lessees

Updated: An executive overview of the lease accounting standard from a lessee’s perspective.

For companies that have not yet adopted the new standard, we highlight key accounting changes and organizational impacts for lessees applying ASC 842.


Lessees in the scope of ASC 842 (ASU 2016-02, ASU 2018-01, ASU 2018-10, ASU 2018-11, ASU 2018-20, ASU 2019-01, ASU 2019-10, ASU 2020-02, ASU 2020-05)

Relevant dates

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

Annual periods – In 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




* 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

  • 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

Handbook: Leases

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