Accounting Guide

Appendix D The New Leases Standard: FASB ASC 842

This appendix is nonauthoritative and is included for informational purposes only.

Overview

Issuance and Objective

On February 25, 2016, FASB issued Accounting Standards Update (ASU) No. 2016-02, Leases (Topic 842). The objective of this ASU is to increase transparency and comparability in financial reporting by requiring balance sheet recognition of leases and note disclosure of certain information about lease arrangements. This ASU codifies FASB Accounting Standards Codification (ASC) 842, Leases, and makes conforming amendments to other FASB ASC topics. FASB ASU No. 2016-02 was subsequently amended by the following updates:

•     ASU No. 2018-01, Leases (Topic 842): Land Easement Practical Expedient for Transition to Topic 842

•     ASU No. 2018-10, Codification Improvements to Topic 842, Leases

•     ASU No. 2018-11, Leases (Topic 842): Targeted Improvements

•     ASU No. 2018-20, Leases (Topic 842): Narrow-Scope Improvements for Lessors

•     ASU No. 2019-01, Leases (Topic 842): Codification Improvements

FASB ASC 842 consists of the following subtopics:

a.     Overall

b.     Lessee

c.     Lessor

d.     Sale and Leaseback Transactions

e.     Leveraged Lease Arrangements

Applicability and Effective Dates

Applicability

FASB ASC 842 is applicable to any entity that enters into a lease and applies to all leases and subleases of property, plant, and equipment; it specifically does not apply to the following nondepreciable assets ...