Hot Topic | January 2020

 

Year 1 lease reporting reminders 

This Hot Topic provides key presentation and disclosure reminders about preparing financial statements after the adoption of Topic 842.

Applicability

  • Company’s preparing financial statements and disclosures after the adoption of Topic 842.

Relevant dates

Mandatory effective dates and early adoption provisions:

Effective date: Public business 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 in annual and interim periods?

Yes

 

Key impacts

  • Topic 842 (leases) includes significant new disclosure requirements as compared to the legacy US GAAP leases guidance (Topic 840); it also includes specific requirements with respect to presentation. 
  • The SEC staff have not issued a significant number of comment letters on companies’ accounting and reporting under Topic 842 to date, but those they have issued point to items companies should pay attention to as they prepare their financial statements.
  • SEC registrants are required to provide the full suite of annual disclosures required by a new accounting standard in each quarterly report in the year of adoption. Therefore, SEC registrants that have not yet issued their first annual financial statements under Topic 842 should pay attention to these items as they prepare their interim financial statements during the year of adoption.

Report contents

  • Key impacts
  • Lessee discount rate disclosures
  • ROU Asset amortization in operating leases
  • Practical expedient to not separate lease and non-lease components
  • Disclosing variable lease and short-term lease cost
  • Disclosing nature of variable lease payments
  • Topic 840 comparative disclosures
  • MD&A contractual obligations table

Related content

Handbook: Leases

 

 

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