ARTICLE | August 08, 2024
While most entities have completed the implementation of Accounting Standards Codification (ASC) 842, Leases, entities are now addressing post-implementation accounting issues.
Two new Accounting Briefs discuss the accounting for some post-implementation concerns:
One area in particular that is proving to be somewhat problematic is the lessee accounting for impairments of right-of-use (ROU) assets, including when an asset will be abandoned. ROU assets are tested for impairment under the same impairment model applicable to property, plant and equipment (ASC 360-10-35) which requires companies to:
- Identify asset groups
- Perform a recoverability test if a triggering event has occurred
- If applicable, recognize and allocate any identified impairment loss
Additionally, due to the current economic conditions, companies are looking for ways to reduce or contain costs that can impact an entity’s lease accounting if they decide to:
- Partially or fully terminate a lease
- Negotiate lower lease payments, or
- Sublease space
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Source: RSM US LLP.
Reprinted with permission from RSM US LLP.
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