- The adoption of ASC 842 makes accounting much more complex for traditional operating leases. This inherent complexity makes the transition guidance equally complex.
- Lessors’ accounting for leases is substantially unchanged by the new leases Accounting Standard Update No. 2016-02 (ASC 842). However, there are some relevant changes lessors should take note of.
- So far in this series, we have discussed how to identify a lease in a contract and how to classify a lease (as operating or finance type) based on the terms of the lease contract. In this article, we discuss the initial recognition and measurement of leases and how re-measurement is made when changes occur in the contract during the estimated initial period of the lease.
- In the Summer 2016 issue of NAIOP’s Development magazine, Phil Santarelli weighs in on how new guidance from the FASB will change how tenants account for leases in coming years.
- ASC 842 requires each separate lease to be classified at its commencement date, which is at the time that the lessee has the leased asset available for use.
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