ASC 842 for lessees
KPMG Exeutive View | December 2021
Updated: An executive level overview of the new lease accounting standard from a lessee’s perspective.
Our executive summary highlights key accounting changes and organizational impacts for lessees applying ASC 842.
Applicability
- Lessees in the scope of ASC 842
Relevant dates
| 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. | |||
Key Impacts:
- 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
Report contents
- In a snapshot
- Effective dates
- The transition approach
- Leases on-balance sheet
- Other key considerations
Download the document:
Executive Summary
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