Applying the lessee short-term lease exemption
Hot Topic | May 2021
Key considerations for lessees when determining whether to elect – and how to apply – the short-term lease exemption.
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Although short-term leases are in the scope of ASC 842 (leases), a simplified form of accounting is permitted.
Relevant dates
| Effective date | Public companies | Public not-for-profit entities | Private entities |
|---|---|---|---|
Annual periods – Fiscal years beginning after | Dec. 15, 2018 | Dec. 15, 2019 | Dec. 15, 2021 |
| Interim periods- In fiscal years beginning | Dec. 15, 2018 | Dec. 15, 2019 | Dec. 15, 2022 |
| Early adoption allowed? | N/A | N/A | Immediately |
Key Impacts:
- Discusses the scope and disclosure requirements of the short-term lease exemption
- Provides reminders on how common lease terms impact eligibility for the exemption
- Provides answers to commonly asked questions about applying the exemption
Report contents
- Key impacts
- Whether to elect the exemption
- Is 12 months a ‘bright line’?
- Must I reassess short-term leases?
- Lease term with non-consecutive periods of use
- Notice periods
- Short-term lease renewals
- Evergreen leases
- Residual value guarantees
- Effect of past short-term lease renewals on transition
- Other considerations
- Effective date
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Understanding the short-term lease exemption
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Resource
Handbook: Leases
Latest edition: Our in-depth guide to ASC 842 – with Q&As, interpretive guidance and examples.
Leases: Hot Topics
These focused Hot Topics are intended for those with an interest in the detailed application of ASC 842.