Handbooks | June 2023

Insight

Handbook: Leases

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

Scott Muir

Scott Muir

Partner, Dept. of Professional Practice, KPMG US

+1 212-909-5073

Kimber Bascom

Kimber Bascom

Partner, Dept. of Professional Practice, KPMG US

+1 212-909-5664


In this handbook, we explain the leases standard (ASC 842) in detail. We provide detailed Q&As, examples and observations, as well as comparisons to legacy US GAAP.

Applicability

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, 2021-05, 2021-09, 2023-01)

  • All companies with leases in the scope of ASC 842

Relevant dates

Effective date Public business entities and certain other entities* All other entities

Annual periods – Fiscal years beginning after                                                            

In effect    

Dec 15, 2021

Interim periods – In fiscal years beginning after     

In effect

Dec 15, 2022

Early adoption allowed in fiscal years beginning after

In effect

Yes

* (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; and (3) employee benefit plans that file financial statements with the SEC.

 

Key impacts

ASC 842 has affected organizations, public and private, across all industries that use leases for real estate, equipment, fleet and automobiles, among others. And while the lessor accounting requirements are similar to those under the legacy leasing guidance (ASC 840) in most respects, there are more than a few important changes and new disclosure requirements. Meanwhile, the accounting for more complex transactions, such as sale-leasebacks and build-to-suit leasing arrangements, is significantly changed.

Organized in a Q&A format, this handbook is intended to help you focus effectively and efficiently on the accounting requirements of Topic 842, and answers key questions that continue to arise in practice about their application.

Report contents

  • Scope and definition of a lease
  • Identifying and separating components of a contract
  • Concepts and definitions applicable to lessees and lessors
  • Lessee accounting model
  • Lessor accounting model
  • Subleases
  • Sale-leaseback accounting
  • Income tax effects
  • Leases acquired in a business combination or asset acquisition
  • Disclosures, effective dates and transition

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