Published: September, 2021
ASC 842 on Leases, this standard became effective from the calendar year started on January 1, 2019, for the public companies. For private companies, the standard will be effective from the calendar year beginning January 1, 2020. ASC Topic 842 will substantially alter how companies account for leases in their financial statements. This new standard brings most operating leases, which were accounted for off-balance sheet under the previous leases standard ASC 840, onto the balance sheet.
The new standard will require organizations that lease assets— referred to as “lessees”—to recognize on the balance sheet the assets and liabilities for the rights and obligations created by those leases. Under the new guidance, a lessee will be required to recognize assets and liabilities for leases with lease terms of more than 12 months.
In the first part, we will provide a discussion of the basics of ASC 842 Leases. Briefly, there will be a discussion of the background surrounding the history and reason for the development of the Lease Standard. The online CPE class will then provide attendees with the basic concepts that need to be understood. New concepts, such as a right-of-use asset and operating lease vs. a finance lease with be discussed and there will be examples and problems for the attendees to better understand the underlying concepts.
Consistent with current Generally Accepted Accounting Principles (GAAP), the recognition, measurement, and presentation of expenses and cash flows arising from a lease by a lessee primarily will depend on its classification as a finance or operating lease.
However, unlike current GAAP—which requires only capital leases to be recognized on the balance sheet— the new ASU will require both types of leases to be recognized on the balance sheet.
In the next part, we will provide a step-by-step practical approach to implementing ASC 842 Leases. The lessons learned by public companies that have implemented the Lease Standard will be the backdrop for the discussion. Additionally, there will be an active discussion of the format changes to the financial statements as a result of implementing ASC 842 Leases. The new format for presenting leases on the financial statements may potentially affect financial ratios, loan covenants, and the financial position of the company.
Key topics covered in this session of this online CPE Conference are:
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Certified Public Accountant (CPA), Samuel Monastra
Samuel A. Monastra, CPA has spent his career as a public accountant. As a client-facing professional, Mr. Monastra has excellent experience working with publicly held companies and large privately held companies. Industry focus includes: healthcare; life sciences and technology; manufacturing and distribution; and real estate and construction.
Sam has held executive level positions with “Big Four” and Top 10 international accounting firms, including KPMG, RSM, and BDO. Sam served as a member of the Editorial Board of the Pennsylvania CPA Journal and is a frequent speaker for a variety of national organizations including the AICPA, State CPA societies, the Institute of Internal Auditors, and the Institute of Management Accountants. Principal speaking topics include: Revenue Recognition, Lease Accounting, Income Tax Accounting, Business Combinations, Fair Value, Inventory, Internal Controls, and Auditing Issues & Techniques
Dec 11th, 2021
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