Under the previous guidance, ASC 840, leases were labeled capital or operating leases. However, their labels were changed to finance and operating leases under ASC 842. The criteria defining a finance lease is as noted under the guidance in842-10-25-2: The lease transfers ownership of the un...
ASC 842 applies to the majority of leases andsubleases, but some exceptions exist. A few specific lease types are out of the scope of Topic 842 and the guidance should not be applied to these transactions. Here are the out-of-scope lease types, as detailed in Subtopic 842-10-15-1: Le...
The main focus of the FASB was specifically to improve the guidance for operating leases in the financial statements of lessees. Lessees will recognize all leases, other than short-term leases, on the balance sheet. Lessees will recognize a right-of-use (ROU) asset and a lease liability ...
Separate guidance is provided forlessees and lessors. However, the remainder of this article will discuss the accounting treatment for a lessee. Lease modification types The proper accounting treatment for a lease modification depends on the nature of the modification.ASC842specifically distinguishes bet...
GAAP related to revenue developed piecemeal, with specific, often industry-related requirements, but it also had broad concepts. In some cases, the guidance resulted in different accounting for economically similar transactions. In addition to the guidance in ASC Topic 605, Revenue Recognition, guidanc...
Seek guidance from the FASB and the AICPA. FASB Revenue Recognition Educational Resources AICPA Technical Hotline (Phone: 877.242.7212) Read articles. A “summary” of the ASC by RSM can be found here. Alert your clients to the new standard’s implications –Adopting Topic 606 is time-consumi...
TopicASC470 provides guidance on accounting for debt for entities reporting under USGAAP. The standard consists of six subtopics: Debt overall, addressing the determination of the classification of a debt arrangement Debt with conversion features and other options ...