Find out how to make sense of this complicated standard and develop strategies for overcoming unforeseen challenges in the implementation process. Editor: Annette B. Smith, CPA. Instead, be proactive. Webinar: Preparing for the New Leases Standard (ASC 842) Watch our free on-demand webcast designed to provide an overview of the new lease guidance, and focuses on those provisions representing major substantive changes to financial reporting. All entities; Event contents. Jump to: navigation, search. ASC 842 requires most leases to be accounted for on the reporting lessee's balance sheet. KPMG professionals discuss lease accounting impacts of the current economic environment and entities’ related actions, recent FASB lease-related activities, and private entity implementation of ASC 842. ASC 842 defined an agreement as a lease if the contract conveys in exchange for consideration for a period of time the right to control the use of an identified asset (property, plant or equipment). 2016-02, Leases (Topic 842). As a result, ASC 842 changes the definition of a lease. US accounting. Don’t wait: Act today on ASC 842 . ASC 842. ASC 842 did not redefine what constitutes a lease as a much as it clarified what is and what is not a lease. The longer you wait, the more likely you are to run into issues that can restrict your resources. You and your team need to take action to understand what ASC 842 means to your company — and get started on the significant work involved. 11200 NEW LEASING STANDARD (FASB ASC TOPIC 842) (Last updated: 10/30/2020) In February 2016, the FASB issued ASU No. In an act of relief for companies during the coronavirus pandemic, the Financial Accounting Standards Board (FASB) recently voted to propose a one-year deferral of major accounting standards, including ASC 842. 2016-02, Leases (Topic 842), which is effective for public companies for fiscal years and interim periods within fiscal years beginning after Dec. 15, 2018 (Dec. 15, 2021, for entities not meeting FASB's definition of a public business entity). The purpose of ASC 842 is to bring most operating leases, which are currently accounted for off-balance sheet, onto the balance sheet. With the COVID-19 pandemic bringing unexpected challenges over the course of the last few months, FASB has officially issued Accounting Standards Update (ASU) 2020-05 providing privately-held entities and private nonprofit organizations with a one-year deferral of the ASC 606, Revenue from Contracts with Customers, effective dates, and ASC 842, Leases. FASB’s proposed ASC 842 delay doesn’t mean you should put preparations for the new rules on the back burner. ASC 842 Definition of a Lease. A Guided Approach to Achieving ASC 842 Compliance Preparing for ASC 842 lease accounting compliance requires a lot of dedicated time, planning and resources. Lease accounting impacts of the current economic environment and related entity actions Inventory your company’s leases. Earlier application is permitted. Public entities must apply Topic 842 to annual reporting periods beginning after December 15, 2018, including interim reporting periods within that reporting period. 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