Learn the Basics of Leases: Find out Why ASC 842 Came into Effect

Learning Objectives

• To explain and identify leases in contracts
• To explain the right-of-use model in lease accounting
• To discuss the difference between an operating lease and a finance lease
• To summarize the criteria for accounting for a finance lease

Course Description

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.

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 this webinar, Samuel Monastra 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.

This Online CPE webinar on Accounting webinar covers the following Key Topics: 

• Basics of ASC 842 Leases
• History and reason for the development of the Lease Standard
• Basic concepts such as right-of-use assets, operating vs. finance lease etc. 
• Practical examples for the better understanding of the concepts

Overview

• Applicable guidence

  10 mins
• Why did the FASB issue ASC 842 leases?

  15 mins
• What is a Lease?

  22 mins
• Right of use asset

  50 mins
• Lessor accounting

  61 mins
• Right to control the use of the identified asset

  83 mins