ASC 842 for lessors
Handbook | August 2021
Updated: An executive overview of the lease accounting standard from a lessor’s perspective.
For companies that have not yet adopted the new standard, we highlight key accounting changes and organizational impacts for lessors applying ASC 842.
Applicability
Lessors in the scope of ASC 842 (ASU 2016-02, ASU 2018-01, ASU 2018-10, ASU 2018-11, ASU 2018-20, ASU 2019-01, ASU 2019-10, ASU 2020-02, ASU 2020-05, ASU 2021-05).
Relevant dates
| Effective date | Public entities and certain other entities* | Public NFPs** | All other entities |
|---|---|---|---|
Annual periods – In 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:
- Lessor accounting is not fundamentally changed, but important differences from ASC 840 exist
- Key aspects of the lessor accounting guidance have been aligned with the guidance in ASC 606 (revenue recognition)
- Your customers will now be required to recognize all leases, including operating leases, with terms greater than 12 months on their balance sheets
- Accounting systems, processes and control changes will likely be necessary to comply with the changes to lessor accounting and the increased lessor disclosure requirements
- Lessors can choose between two transition methods, with additional practical expedients available
Report contents
- In a snapshot
- How could it impact your business?
- Effective dates
- The transition approach
- Lessor accounting model substantially unchanged
- Other key considerations
- Key changes from Topic 840
- Other important changes
Download the document:
Executive Summary
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