Applying the lessee short-term lease exemption

Although short-term leases are in the scope of ASC 842 (leases), a simplified form of accounting is permitted.

Applicability

• All lessees that have or will apply ASC 842

Relevant dates

Key impacts

• Discusses the scope and disclosure requirements of the short-term lease exemption
• Provides reminders on how common lease terms impact eligibility for the exemption
• Provides answers to commonly asked questions about applying the exemption

Report contents

• Key impacts
• Whether to elect the exemption
• Is 12 months a ‘bright line’?
• Must I reassess short-term leases?
• Lease term with non-consecutive periods of use
• Notice periods
• Short-term lease renewals
• Evergreen leases
• Residual value guarantees
• Effect of past short-term lease renewals on transition
• Other considerations
• Effective date