FINANCIAL REPORTING INSIGHTS  |  January 28, 2020

We have updated the following publications to reflect the changes recently made by the Financial Accounting Standards Board (FASB) to the effective date of Topic 842, Leases, of the FASB’s Accounting Standards Codification (ASC): 

• Leases: Overview of ASC 842, which provides a high-level summary of certain guidance in ASC 842 applicable to lessees and (or) lessors.
• A guide to lessee accounting under ASC 842 (our lessee guide), which includes in-depth discussion and numerous detailed examples on all facets of a lessee’s accounting for its leases.

Our lessee guide also was updated to: (a) address how a lessee should account for its guarantee of a lessor’s debt and (b) discuss the specific transition guidance related to preexisting leases that were acquired in a business combination. 

While the effective date of ASC 842 for most public business entities and certain not-for-profit entities and employee benefit plans (with limited exceptions) already has passed, other entities have until their fiscal year beginning after December 15, 2020 (and interim periods thereafter). As such, for these other entities that have a calendar year end, ASC 842 is effective in their fiscal years ending December 31, 2021. While this may seem like it is well off into the future, there should be no delay in the implementation of ASC 842 given the complexities involved. Chapter 10 of our lessee guide provides additional information and examples about the effective date and lessee transition guidance in ASC 842.