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ASC 842 for lessors

Handbook | August 2021

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

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

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

Applicability

Lessors 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, ASU 2021-05).

Relevant dates

Effective datePublic 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

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:

  • Lessor accounting is not fundamentally changed, but important differences from ASC 840 exist
  • Key aspects of the lessor accounting guidance have been aligned with the guidance in ASC 606 (revenue recognition)
  • Your customers will now be required to recognize all leases, including operating leases, with terms greater than 12 months on their balance sheets
  • Accounting systems, processes and control changes will likely be necessary to comply with the changes to lessor accounting and the increased lessor disclosure requirements
  • Lessors can choose between two transition methods, with additional practical expedients available

Report contents

  • In a snapshot
  • How could it impact your business?
  • Effective dates
  • The transition approach
  • Lessor accounting model substantially unchanged
  • Other key considerations
  • Key changes from Topic 840
  • Other important changes

Download the document:

Executive Summary

Download PDF

Accounting Research Online

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