Accounting for changes to leases under ASC 842
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Accounting for changes to leases under ASC 842

Jul 18, 2018 · 549 KB Download

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CPEA lease standard implementation series – part vi

In 2016, the Financial Accounting Standards Board (FASB) issued its long-awaited revision to lease accounting, Accounting Standards Update (ASU) 2016-02, Leases (codified in FASB Accounting Standards Codification [FASB ASC] 842, Leases). There are elements of the new standard that could impact almost all entities to some extent, although lessees likely will see the most significant changes. These changes are wide-ranging and cover several CPEA reports in this series.

In this report we focus on common scenarios related to reassessments, remeasurements, and modifications of existing leases.

  • Initial amounts must be reassessed when any of five events occur as outlined in the standard, which could result in the amount recorded as a right of use asset and lease liability being remeasured.

  • Modifications to existing leases occur frequently and the accounting can differ if the modification must be accounted for as a separate contract or if it is accounted for as a modification of the existing contract.

Those topics are discussed in detail with both illustrative examples as well as the journal entries which would be required in each scenario.

Download the Report on lease modification and remeasurement with journal entries

File name: CPEA-lease-jes.pdf

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