This Hot Topic highlights important presentation and disclosure reminders under ASC 842 as companies prepare their year-end financial statements.
Applicability
- Companies preparing financial statements and disclosures after the adoption of ASC 842.
Relevant dates
| Effective date: | Public business entities | All other entities |
|---|---|---|
Annual periods – Fiscal years beginning after |
December 15, 2018 |
December 15, 2021 |
Interim periods – In fiscal years beginning after |
December 15, 2018 |
December 15, 2022 |
Early adoption allowed in fiscal years beginning after |
N/A |
Immediately |
Key impacts
- ASC 842 (lease accounting) includes significant disclosure requirements and specific presentation requirements.
- The SEC staff has not issued a significant number of comment letters on companies’ accounting and reporting under ASC 842 to date. However, companies should pay attention to the issues highlighted herein that come from letters that have been issued as they prepare their financial statements, including issues of lease-related non-GAAP adjustments.
Report contents
- Key impacts
- COVID-19: rent concessions
- Lessee discount rate disclosures
- ROU asset amortization in operating leases
- Operating lease cash flow presentation
- Practical expedient to not separate lease and non-lease components
- Disclosing variable lease and short-term lease cost
- Disclosing nature of variable lease payments
- ASC 840 comparative disclosures
- Lease-related non-GAAP adjustments
- MD&A contractual obligations table
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