WHAT IT IS

The Financial Accounting Standards Board (FASB) published the lease accounting standard ASC 842, to replace the lease accounting standard ASC 840. The purpose of ASC 842 is to increase disclosure and visibility into the leasing obligations of both public and private organizations.

WHY

  • There are 1.25 Trillion off-balance sheet operating lease commitments (for SEC registrants)
  • Most lease assets and liabilities are currently off-balance sheet
  • There is limited information about operating leases

 

EFFECTIVE DATES

Public companies

Public and private companies have different effective dates for the new lease accounting standard. For public companies, the FASB standard was effective for reporting periods that began subsequent to December 15, 2018. For calendar year-end companies, this means the standard was adopted on January 1, 2019.

Private companies

ASC 842 is effective for private companies and nonprofit organizations’ annual reporting periods beginning after December 15, 2021. This means many private companies and non-profit organizations are working through the lease accounting transition right now.

 

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