Hot Topic | January 2021

 

Insight

Important year-end lease reporting reminders

Key presentation and disclosure reminders for preparing financial statements under ASC 842.

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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