AccountingLink

    Leases

    11 October 2018

    Financial Reporting Developments - Lease accounting - Accounting Standards Codification 842, Leases
    Our FRD publication on accounting for leases under ASC 842 has been updated to reflect recent standard-setting activity, including the amendments to ASC 842 that allow an entity to apply the transition provisions at the beginning of the period of adoption. The updates also address proposed amendments to ASC 842 and clarify and enhance our interpretive guidance. Refer to Appendix E of the publication for a summary of the updates.

    11 October 2018

    Technical Line - How the new leases standard affects airlines
    Our Technical Line highlights key implications of the new leases standard for airlines. This publication supplements our Financial reporting developments publication, Lease accounting: Accounting Standards Codification 842, Leases, and should be read in conjunction with it.

    11 October 2018

    Technical Line - How the new leases standard affects telecom and media and entertainment entities
    Our Technical Line highlights key implications of the new leases standard for telecom and media and entertainment entities. This publication supplements our Financial reporting developments publication, Lease accounting: Accounting Standards Codification 842, Leases, and should be read in conjunction with it.

    20 September 2018

    Technical Line - How the new leases standard affects engineering and construction entities
    Our Technical Line highlights key implications of the new leases standard for engineering and construction entities. This publication supplements our Financial reporting developments publication, Lease accounting: Accounting Standards Codification 842, Leases, and should be read in conjunction with it.

    12 September 2018

    Comment Letter - FASB proposal on narrow-scope amendments to help lessors apply the new leases standard
    In our comment letter, we supported the FASB’s efforts to reduce the cost and complexity of applying the guidance in ASC 842, Leases, by allowing lessors to make an accounting policy election to not evaluate whether sales taxes and similar taxes imposed by a third party on a lease revenue-producing activity are the primary obligation of the lessor as owner of the underlying leased asset. However, we believe the Board should clarify certain aspects of the proposal. We also support addressing stakeholders’ concerns about the difficulty of estimating certain costs paid directly by lessees to third parties on the lessor’s behalf but recommend that the FASB make changes to the proposed amendments to make them operable. We also support addressing stakeholders’ concerns about the guidance on when a lessor recognizes variable payments that relate to both a lease component and non-lease component.

    14 August 2018

    To the Point - FASB proposes narrow-scope amendments to help lessors apply the new leases standard
    The FASB proposed allowing lessors to make an accounting policy election to not evaluate whether sales taxes and other similar taxes imposed by a third party on a lease revenue-producing activity are the primary obligation of the lessor as owner of the underlying leased asset. The proposal would require lessors to exclude certain lessor costs paid directly by lessees to third parties on the lessor’s behalf from variable payments if the amount paid is not readily determinable by the lessor. The proposal would also clarify that lessors are required to allocate (rather than recognize) certain variable payments to lease and non-lease components of a contract when the changes in facts and circumstances on which the variable payment is based occur. Comments are due by 12 September 2018.

    31 July 2018

    Technical Line - How the new leases standard affects oil and gas entities
    Our Technical Line highlights key implications of the new leases standard for entities in the oil and gas industry. This publication supplements our Financial reporting developments publication, Lease accounting: Accounting Standards Codification 842, Leases, and should be read in conjunction with it.

    31 July 2018

    To the Point - FASB adds transition option and practical expedient for lessors to new leases standard
    The FASB added a transition option to the new leases standard that allows entities to not apply the new guidance in the comparative periods they present in their financial statements in the year of adoption. The FASB also provided a practical expedient that gives lessors an option to combine non-lease and associated lease components when certain criteria are met and requires a lessor to account for the combined component in accordance with the new revenue standard if the associated non-lease components are the predominant component.

    19 July 2018

    To the Point - FASB issues narrow amendments to the new leases standard
    The FASB issued narrow amendments to clarify how to apply certain aspects of the new leases standard. The amendments address the rate implicit in the lease, impairment of the net investment in the lease, lessee reassessment of lease classification, lessor reassessment of lease term and purchase options, variable payments that depend on an index or rate and certain transition adjustments, among other things.

    19 June 2018

    Financial Reporting Developments - Lease accounting - Accounting Standards Codification 840, Leases
    This publication does not address the accounting for leases under the new leases standard, which is codified in ASC 842. That new standard, which will supersede ASC 840, requires lessees to recognize assets and liabilities for most leases but recognize expenses on their income statement in a manner similar to today’s accounting.

    5 February 2018

    Comment letter - FASB proposal to add a transition option and practical expedient for lessors to the new leases standard
    In our comment letter, we supported the FASB’s efforts to reduce the cost and complexity of applying the guidance in ASC 842, Leases. However, we believe the Board could provide additional relief by giving entities the option to use an alternative transition method that would allow them to apply the recognition and subsequent measurement guidance in ASC 842 to existing leases at the date of initial application. In addition, we expressed concern that the proposed criteria for use of the lessor practical expedient would inadvertently limit the population of leases to which the practical expedient could be applied.

    25 January 2018

    To the Point - FASB issues transition practical expedient for land easements and clarification on applying ASC 842
    The FASB issued final guidance to provide an optional transition practical expedient for land easements in the new leases standard that permits an entity to continue applying its current policy for accounting for land easements that exist as of or expire before the effective date of ASC 842, Leases. An entity that elects the practical expedient must apply it to all of its existing or expired land easements that it didn’t previously account for under ASC 840.

    9 January 2018

    To the Point - FASB proposes adding transition option and practical expedient for lessors to new leases standard
    The FASB proposed adding a transition option to the new leases standard that would allow entities to not apply the new guidance in the comparative periods they present in their financial statements in the year of adoption. The FASB also proposed a practical expedient that would provide lessors with an option to combine lease and non-lease components when certain criteria are met. Comments are due by 5 February 2018.

    13 November 2017

    Comment Letter - Proposed technical corrections and improvements to new leases standard
    In our comment letter, we support the FASB’s effort to address feedback from stakeholders about how to apply certain aspects of ASC 842, Leases. We agree that the proposed changes would clarify the new leases standard and correct guidance that could be misinterpreted or does not represent the intention of the FASB. We also recommend additional clarifications.

    25 October 2017

    Comment letter - FASB proposal to add transition practical expedient for land easements and clarify how to apply ASC 842
    In our comment letter, we support the FASB’s objective to reduce the cost and complexity of applying the transition guidance in ASC 842, Leases. We believe the proposal could contribute to that objective by helping to clarify which land easements should be evaluated under ASC 842. However, we recommend that the Board clarify that the practical expedient would not apply to land easements previously accounted for as leases. In addition, we suggest that the Board consider additional clarifications on how to evaluate land easement contracts after the effective date of the new leases standard.

    2 October 2017

    To the Point - FASB proposes narrow amendments and technical corrections to the new leases standard
    The FASB proposed narrow amendments and technical corrections to clarify how to apply certain aspects of the new leases standard. The proposed clarifications would address the rate implicit in the lease, impairment of the net investment in the lease, lessee reassessment of lease classification, lessor reassessment of lease term and purchase options, variable payments that depend on an index or rate and certain transition adjustments, among other things. Comments are due by 13 November 2017.