WHITE PAPER | October 12, 2022
Our white paper on lessor accounting under ASC 842 explains contracts within the scope of Topic 842, Leases, of the Financial Accounting Standards Board’s Accounting Standards Codification (ASC), as well as a lessor’s accounting under ASC 842 for its contracts that are (or include) leases. The most significant changes under ASC 842 is for lessees who are now required to recognize right-of-use (ROU) assets and lease liabilities for most leases (see A guide to lessee accounting under ASC 842). The impact on lessors is not expected to be as significant.
The white paper to lessor accounting includes guidance and examples to:
- Determine whether a contract is within the scope of ASC 842
- Determine whether a contract is or includes a lease that meets the definition of a lease in ASC 842
- Determine the unit(s) of account in the contract if a contract is or includes one or more leases (which involves identifying the lease and non-lease components in the contract, as well as non-components (e.g., taxes, insurance)), and determine whether the lease and non-lease components should be treated as separate units of account
- Identify or determine the key inputs needed to classify and account for a lease under ASC 842
- Determine the lease’s classification under ASC 842
- Apply the appropriate accounting model in ASC 842 to the lease (which depends on its classification)
- Present and disclose the lease in the financial statements in accordance with ASC 842
The white paper also discusses the effective date and transition requirements in ASC 842 and differences between how lessors account for leases under ASC 842 and International Financial Reporting Standard (IFRS) 16, Leases.
Our white paper is a valuable tool to lessors as they implement any changes arising from ASC 842. Click here for information about the ASC 842 accounting standards implementation services provided by RSM.
Do you have questions or want to talk?
Call us at (800) 232-9547 or fill out the form below and we’ll contact you to discuss your specific situation.
This article was written by RSM US LLP and originally appeared on Oct 12, 2022.
2022 RSM US LLP. All rights reserved.
https://rsmus.com/insights/financial-reporting/lessor-accounting-under-asc-842.html
RSM US Alliance provides its members with access to resources of RSM US LLP. RSM US Alliance member firms are separate and independent businesses and legal entities that are responsible for their own acts and omissions, and each are separate and independent from RSM US LLP. RSM US LLP is the U.S. member firm of RSM International, a global network of independent audit, tax, and consulting firms. Members of RSM US Alliance have access to RSM International resources through RSM US LLP but are not member firms of RSM International. Visit rsmus.com/aboutus for more information regarding RSM US LLP and RSM International. The RSM(tm) brandmark is used under license by RSM US LLP. RSM US Alliance products and services are proprietary to RSM US LLP.
Insero & Co. CPAs, LLP is a proud member of RSM US Alliance, a premier affiliation of independent accounting and consulting firms in the United States. RSM US Alliance provides our firm with access to resources of RSM US LLP, the leading provider of audit, tax and consulting services focused on the middle market. RSM US LLP is a licensed CPA firm and the U.S. member of RSM International, a global network of independent audit, tax and consulting firms with more than 43,000 people in over 120 countries.
Our membership in RSM US Alliance has elevated our capabilities in the marketplace, helping to differentiate our firm from the competition while allowing us to maintain our independence and entrepreneurial culture. We have access to a valuable peer network of like-sized firms as well as a broad range of tools, expertise, and technical resources.
For more information on how Insero & Co. CPAs can assist you, please call (800) 232-9547.
