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Lessee discount rates under ASC 842

Hot Topic | November 2021

Key considerations for public and private entity lessees when determining the discount rates for leases.

Determining an appropriate lessee discount rate under ASC 842 will frequently be neither a straightforwarded exercise nor the same as under ASC 840, particularly for private entities. 


  • All lessees that have applied or will apply ASC 842

Relevant dates

EffectivePublic companiesPublic not-for-profit entitiesPrivate entities

Annual periods – Fiscal years beginning after                                                                                    

December 15, 2018

December 15, 2019

December 15, 2021

Interim periods – In fiscal years beginning after     

December 15, 2018

December 15, 2019

December 15, 2022

Early adoption allowed?




Key impacts

  • Provides guidance about how a lessee determines the discount rate for a lease under ASC 842
  • Discusses how ASU 2021-09 changes the private entity lessee risk-free discount rate practical expedient
  • Reminders and examples about how to determine the lessee’s incremental borrowing rate

Report contents

  • Key impacts
  • Rate implicit in the lease
  • Risk-free discount rate practical expedient (private entities only)
  • Incremental borrowing rate
  • Examples

Download the document:

Leases - Enhanced focus on lessee discount rates

Download PDF

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