ASC 842 for equipment lessees

Our executive summary highlights key accounting changes and organizational impacts for lessees applying ASC 842.

Applicability

Effective date	Public entities and certain other entities*	Public NFPs**	All other entities
Annual periods – Fiscal years beginning after	Dec 15, 2018	Dec 15, 2019	Dec 15, 2021
Interim periods – In fiscal years beginning after	Dec 15, 2018	Dec 15, 2019	Dec 15, 2022
Early adoption allowed in fiscal years beginning after	N/A	Yes	Yes
* Includes (1) public business entities; (2) not-for-profits that have issued, or are conduit bond obligors for, securities that are traded, listed or quoted on an exchange or an over-the-counter market (‘Public NFPs’); and (3) employee benefit plans that file financial statements with the SEC. ** That had not issued GAAP-compliant financial statements reflecting the adoption of ASC 842 before June 3, 2020.

Lessees will recognize all leases, including operating leases, with a term greater than 12 months on-balance sheet
Key balance sheet measures and ratios may change, IT systems may need to be upgraded or modified, and accounting processes and/or internal controls will need to be revised
Lessees can choose between two transition methods, with additional practical expedients available
Sale-leaseback accounting is substantially changed
Both qualitative and quantitative disclosures are expanded

Resource

Handbook: Leases

Latest edition: Our in-depth guide to ASC 842 – with Q&As, interpretive guidance and examples.

Executive Summary

Topic 842: Equipment lessees

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