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In February 2016, FASB issued ASU 2016-02, Leases, which provides new guidelines that change the accounting for leasing arrangements. To be able to properly account for leases, financial professionals must understand ASU 2016-02 (also referred to as Topic 842). This guidance covers information on how leases should be accounted for. The previous leasing standard (ASC 840) had been in existence for almost 40 years.

Under ASC Topic 842, lessors continue to classify leases as operating, direct financing, or sales-type. While lessees now classify leases as operating or financing leases. Previous guidance only required capital leases to be reflected on the BS. The new guidance requires all leases to be reflected on the BS. This is a major change for organizations and will cause their BS to swell as leases must now be disclosed on the BS.

The standards original effective dates were prior to 2019. In April 2020, due to COVID-19, FASB voted to defer the effective date for ASC 842 for private companies and certain NFP’s for one year. For private companies and private NFPs, the leasing standard will be effective for fiscal years beginning after December 15, 2021, and interim periods within fiscal years beginning after December 15, 2022. For public companies the leasing standard is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years.

The course covers elements of lease classification for both lessees and lessors. Also, numerous examples are incorporated as reference.

Note: This course is also a part of The Controllership Series.

Learning Objectives

  • Identify the purpose and effective date of the updated lease standard.
  • Recognize and understand the updated Topic 842 – Leases.
  • Identify the types/classifications of leases for lessees/lessors.
  • Explore how to account for a lessee’s operating and capital leases and required disclosures.
  • Identify how to account for a lessor’s operating, direct financing, sales-type leases and required disclosures.
  • Discover and understand Sale and leaseback issues.
Last updated/reviewed: Aug 04, 2021

Included In Certifications

This course is included in the following Certification Programs:

17 CoursesThe Controllership Series Certification

  1. The Controllership Series: The Controller Function - Elevating the Role
  2. The Controllership Series: The Controller Function - Strategic and Annual Planning
  3. GAAP Principles, Assumptions and Considerations
  4. The Treasury Function Part 1: Cash, Liquidity and Investments
  5. The Controllership Series: The Controller Function - Cash and Investments
  6. ASC 842 Accounting for Leases - Deep Dive
  7. Revenue Recognition Standard Overview
  8. The Controllership Series: The Controller Function - Inventory Part 1
  9. The Controllership Series: The Controller Function - Inventory Part 2 - Inventory Valuation, Physical Inventory Methods and Inventory fraud
  10. The Controllership Series: Overhead, Direct and Indirect Costs and Allocation Methods
  11. The Controllership Series: Financial Statement Preparation and Presentation
  12. Analyzing Financial Ratios - Leverage
  13. Analyzing Financial Ratios - Performance And Efficiency
  14. Analyzing Financial Ratios - Solvency, Liquidity and Debt
  15. The Controllership Series: The Financial Close Process
  16. The Controllership Series: Managerial Accounting Basics and Cost Principles
  17. Tools for The Controllership Series Certificate

3 Reviews (10 ratings)Reviews

4
Anonymous Author
Good course, but a bit more explaining rather than reading the slides would have been helpful. Still I really enjoyed the instructor making this complex material easier to understand.
5
Anonymous Author
Good overview of the detail of new guidance. The appendices were good for examples.
5
Anonymous Author
I enjoyed this course very much, and I found it very informative.

Prerequisites

Course Complexity: Foundational

No advanced preparation or prerequisites are required for this course.

Education Provider Information

Company:
Illumeo, Inc., 75 East Santa Clara St., Suite 1215, San Jose, CA 95113
Contact:
For more information regarding this course, including complaint and cancellation policies, please contact our offices at (408) 400- 3993 or send an e-mail to .
Course Syllabus
INTRODUCTION AND OVERVIEW
  5:40Introduction to ASC 842 Accounting for Leases
  14:14Understand the Updated Lease Standards
  10:54Lease Classification
  9:10Lease Classification Cont'd
  6:29Types of Leases for Lessees
  13:34Types of Leases for Lessors
  10:59Lease Classification Areas of Focus
  5:26Purchase Options, Discount Rate and Implicit Rate
  20:26Sales Leaseback Transactions
  7:00Financial Statement Disclosures
APPENDIX
  13:17Appendix Part 1
  6:40Appendix Part 2
  2:10Appendix Part 3
CONTINUOUS PLAY
  2:05:59ASC 842 Accounting for Leases - Deep Dive
SUPPORTING MATERIAL
  PDFSlides: ASC 842 Accounting for Leases - Deep Dive
  PDFASC 842 Accounting for Leases - Deep Dive Glossary/ Index
REVIEW AND TEST
  quizREVIEW QUESTIONS
 examFINAL EXAM