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Accounting for LeasesCode: 20-ACCLEASE
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Course description and objectives:
In February 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2016-02, Leases(ASC 842), which will replace the prior lease guidance in 2019 by providing new requirements of ﬁnancial accounting and reporting for lessees and lessors. This new standard represents the first comprehensive overhaul of lease accounting since FAS 13 was issued in 1976. The new guidancewill affect entities across all industries because most companies enter into contracts that contain leases to support their business operations.Lessees will likely see the most significant changes as they are required to recognize substantially all leases on their balance sheets with a corresponding right-of-use asset.While lessor accounting remains similar to previous guidance in most respects, there are some important changes.For example, certain principles of the lessor model are updated to align with changes to the lessee model and the new revenue recognition standard (ASC 606).
The new lease guidance introduces significant changes to lease accounting, such aslesseesí recognition of lease assets and liabilities, an exception for short-term leases, elimination of leveraged leases, new criteria for reporting sale leaseback transactions, increased use of judgment, and expansive disclosures. Moreover, entities are required to use a modified retrospective approachto reflect the effect of the new guidance in the earliest year presented in the financial statements.As a result, implementation of ASC 842 could have significant impact on companiesí financial operations - from general accounting and financial reporting, treasury, IT systems, tax, budgeting to forecasting functions. The change in lease standardpresents both a challenge and an opportunity to enhance internal control and optimize the lease accounting and administration processes.
Presentation Method: QAS Self-Study
CPE credit: 7 Hours
Program Level: Update
Advance Preparation: None
Exam expiration date: Participants must submit exams for grading within one year from the date of purchase
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