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This course provides a basic understanding of the new lease accounting rules pursuant to Accounting Standards Codification (ASC) Topic 842, Leases, issued in February 2016. ASC 842 makes substantial changes to the accounting for leases, primarily for the Lessee.
A lease conveys the right to the Lessee to control the use of the identified property, plant, or equipment for a period of time in exchange for consideration to the Lessor. For the Lessee, leases are either Finance leases or Operating leases. The Lessee will record a right of use asset and lease liability for all leases with a term greater than one year. A Finance lease must meet one of five requirements, four of which are similar to prior capital lease accounting. If a lease is not a Finance lease, it’s an Operating lease. Most leases of equipment will be Finance leases and space leases will be Operating leases. For the Lessor, a lease is either an Operating lease, Direct Financing lease or Sales-Type lease. In general, the accounting for the Lessor has not changed substantially from the prior rules.
Accounting for leases from both the Lessee's and Lessor's perspective will be analyzed as well as lease straight lining, advantages and disadvantages of leasing, financial statement disclosure and the financial impact of the new rules.
Learning Objectives
- Discover the new accounting rules pursuant to Accounting Standards Codification (ASC) Topic 842, Leases.
- Explore the accounting for Finance and Operating leases for Lessees.
- Explore the accounting for Operating, Direct Financing, and Sales-Type leases for Lessors.
- Discover how to calculate right of use asset, lease liability, interest expense, and amortization of the leased asset.
- Discover specific examples of lease accounting for both Lessee and Lessor.
- Discover the concept of straight lining of leases.
- Recognize the advantages and disadvantages of leasing.
- Identify the new financial statement disclosures for leases.
Last updated/reviewed: October 26, 2018
95 Reviews (407 ratings)Reviews
Anonymous
(Senior Internal Auditor)
This course is very useful and beneficial to my job responsibility. I am glad to have taken it.
Anonymous
(Consultant)
Good overview of the new lease accounting rules with examples to reinforce understanding. One of the exam questions, however, seems to provide an answer contrary to the information provided in the presentation slides. It states lessor accounting for an operating lease of rental space includes "A debit to leased asset and a credit to net investment in lease." as the correct answer. The slide presentation clearly indicates that the answer should be a dr. to cash and a cr. to rent income. I believe a dr. to cash and a cr. to rental income is the correct answer for lessor's operating lease. Why would one ever dr. a leased asset and cr. to net investment in lease?
Anonymous
(Manager, Conservatorship Operations)
Overall effective overview. Test focused more on whether one can perform calculations versus understanding the basics of new lease accounting rules and impact. Since it is a "101" course, I believe the concepts and impact are more important than the calculations. Instructor starts off the presentation very technical, with the information I wished to glean more in the impact and overview. For those in the business of lease accounting, this would be fine.
Wendi Finn
View Instructor Profile
I appreciated the update on accounting for leases. I have a CPA, but have worked primarily in security and compliance. The course was helpful to stay up to date with the evolution of Lease accounting. I wish the slides included all the formulas right there with the examples we walked through. I'm a visual learner so seeing the formulas right there with the values helps the calculations stick.
Edward Thill
(Consultant at None)
Material was solid but presentation included too much slide reading. Reference to each slide's number was unnecessary since presenter is driving the slide advancement. Additionally, as one Anonymous comment states, it appears that one Final Exam answer is graded in contrast to the materials presented.
Anonymous
(Accounting Manager)
For being a 101 course I expected it to be a little more basic and explanatory. I felt like the instructor kept saying the same things over and over. Would have liked more examples on how to calculate amounts especially since two of the final exam questions were calculations.
Anonymous
(Accounting Solutions Senior)
Overall, I liked the course. I would like a little more explanation of some of the rules rather than just reading the slides. All accounting rules are written in very complex terms and I felt as though the instructor was merely reading the slides for most of the course.
Dan Villanueva
(Accountant at New York Times)
A great introductory course for the new lease accounting standard. Covers pretty much all of what I'm expecting for the course (overview of the new rules). As other students pointed out, the exam was too technical and also one question has 2 possible answers.
Douglas Graham
(Treasury Manager at na)
Liked the entry, schedules. Anyone wanting to learn about basic lease accounting. I say that without knowing any advanced lease accounting, just assume it gets more complicated. Would be nice to get excel incorporated in here.
Thomas Hayes
(Clinical Associate Professor at University of Arkansas)
I like how well the course is organized. I'm surprised at how much I need to prep for teaching in my intermediate course. Anyone teaching intermediate accounting would benefit.
Anonymous
()
I thought this course was very thorough in explaining the accounting of leases for both the lessee and lessor and also how the new rules for lease accounting affect businesses.
Oscar Young
(To Be Determined at To Be Determined)
Good as/where I focused on content related to ASC 842. A lot is covered within an hour so may be quick for some. Tried not to be distracted minor points around presentation.
Juan Pozzi
(CPA, CGMA -Financial Controller at Oracle)
Nice presentation with a valuable insight of the impact of this ASC in real world business, with considerations over financial ratios and possible effects on loan covenants.
Ramiro Campins
( at na)
I took the course on line while traveling and did not have a financial calculator with me. Showing the calculations for some of the latter modules should have been helpful.
Rhonda Daugherty
(retired at Daugherty)
I agree with the other reviewers that the exam focused too much on the actual result of a calculation of present value and not on the actual topic of lease accounting.
Bryan Oliver
(Senior Accounting Analyst at UMB Financial Corporation)
I felt a little more discussion on the NPV of lease payments year over year to arrive at amortization of lease asset could have used some more discussion
Isaac DAlessandro
(Sr. Auditor at N/A)
This was a very good introduction course to the topic. However, I think a few additional examples would better assist in illustrating the rules.
Anonymous
(Controller)
The examples were relevant and easy to follow. Discussed the lessor and the lessee accounting and was relevant to my job as a Controller.
Anonymous
(Accounting Manager)
This course makes me realize there is a lot of work needed to review current lease agreements and determine how the new asc will apply.
Lee Flick
(- at -)
I thought this was a good course on lease accounting. I would recommend it to anyone looking to learn more about lease accounting.
Roger Luchtefeld
(Controller at Mueller Prost)
My one issue was the presenter's pronunciation of a long 'e' on the first syllable of lessor and lessee. Very distracting to me.
Lisa Kincaid
(Senior Accountant at intelligent RF Solutions)
Very detailed and informative. Some suggestion on sites to help with PV Calculation and disclosure samples would be beneficial.
Timothy Halliday
(Consulting Senior at EKS&H)
Very complex topic. Instructor did a good job of going over it but he could have been better about explaining the PV discounts.
Anonymous
(cfo - consultant)
One of the oldest FASB's still around - great refresher - all accounting personnel needs to know the 4 criteria - well covered.
Simon Williams
(CFO at Australis Music)
Overall a decent overview but ambiguities (eg in advantages / disadvantages of leasing) meant it lacked clarity in places.
Melissa Hanson
(Associate Manager, Financing Services at Stryker)
I wish the calculations were show for PV of lease payments. Liked eh journal entries and real life examples. Good class.
Lilian Dendrinos
(consultant at DLC Group)
Excellent overview of the new rules. I especially liked the examples which reinforced my understanding of the lesson.
Shirley M Jack
(Corporate Accounting and Cash Manager at Evergreen Packaging Inc)
I think that it should state that a calulator is needed to review some of the calculations presented in presentation.
Sherri Yokomizo
(Senior Assistant Controller at Oracle + NetSuite)
The calculations included in the test component were not beneficial - I would prefer to have the test cover concepts.
Karin Williams
(None at self)
Good overview. Wish there had been a table summarizing the accounting and disclosure requirements (a cheatsheet).
Anonymous
(None)
I do not agree with the answer for question number 4. Is that not the correct answer for a lessor, not a lessee?
Anonymous
(Accounting Manager)
A good course to refresh your know-how about leasing topic. Informative, detailed yet concise. Worth the time.
William Barnes
(VP Corporate Controller at In transition)
Solid 101 course. Would like to see a table added to the straight line section summarizing the five years.
Torin Campbell, CMA
(Controller at Form-A-Fab)
Good foundational information about accounting for leases that I'll keep in my files for future reference.
Anonymous
(Consultant)
The fundamentals were explained well. However, the straight-line rent expense entries were not explained.
Pamela Gilbert
(Founder and Director at FutureFit)
Short and to the point. Good presentation. Also good that new proposed accounting rules discussed.
Anonymous
(Accountant II)
What you would expect for a foundation level course. The questions proved to be a nice refresher.
Barry Davis
(Tax Accountant at CP Kelco)
Good overview of lease accounting, and how to determine and treat the different types of leases.
Thomas Tamura
(Consultant at Buxbaum HCS)
Difficulty calculating PV without a calculator. Overall a good refresher on lease accounting
John Caldwell
(Audit Senior at EKS&H)
Overall the course was great, but the sound quality wasn't as good as I would have liked.
Simon Adell
(Chief Financial Officer at Undisclosed)
Toughest course I've taken her so far, but very comprehensive and very recent material.
Anonymous
(CPA)
I was glad that the course had the updated information on the new and upcoming changes.
Brett Pfuehler
(Lead Auditor at The Dow Chemical Company)
Simple topic breakdowns in short segments. Good summary and questions prior to test.
Sergio Pinto
(Assistant Controller at Oracle + NetSuite)
In simple word the instructor was able to pass the proper knowledge about the subject
Lorna Fisher
(Retired Finance Professional with active.. at Retired and enjoying time to pursue pers..)
Content good however pace could have been a little slower with more examples.
Kevin Barnes
(- at Next Level Solar)
Provided a well rounded explanation and the considerations in lease accounting.
Christine Hennig
(Accountant II at Southwestern Energy)
There was a whole lot of slides, I would have liked more written out examples.
Anonymous
(Consultant)
Good simple overview, but did not have my financial calculator for the quiz.
Bette Shepherd
(CFO at D&S Green Services)
The instructor sped through the course and mostly just read from the slides.
Louis Giovachino
(student at University of Florida)
I did not like that the final exam seemed to require a financial calculator.
Julia Fretschl
(Consultant at DLC Group)
It was a clearly explained the topic and the financial impact of the changes
Steve Breault
(Controller at LTC Partners)
General review of lease accounting with examples that are easy to follow.
Anonymous
(Senior Consultant - Specialty Tax Servic..)
The pace was a little too fast, instructor basically just read the slides.
Janine Korovesis
(Controller at Google)
This course was a practical approach to learning accounting under ASC 842
Michael Ward
(Head of Global Internal Audit at Mylan)
The financial impact of the new lease rules was a very valuable section.
Anonymous
()
Decent summary of the new lease rules and overview of lease accounting.
Chamberlin Chamberlin
(Corporate Controller at NTS)
I do not think this provided a valuable course for this complex topic.
Anonymous
(Consultant)
Very Complex. Should have shown how the present values were calculated
Ara Toroyan
(Director - Financial Planning & Procurem.. at NCCI Holdings, Inc.)
Very complicated accounting but a well taught class. Kudos to you.
Anonymous
(Finance Leader)
Would like more charts and diagrams, very strictly text and tables.
Anonymous
(-)
Very concise and practical presentation. A great refresher course.
Tim Philips
(Controller at Self)
Lease accounting is critical for finance staffs of mfg enterprises
Anonymous
(Director of Finance)
Awesome overview - looking forward to implementing the new rule!
Anonymous
(Senior Accountant)
Great overview on a topic that I will have to address this year.
Victor Fuentes
(Manager at RSM)
good material. Controllers should take this, and internal audit
Nicole Goodwin
(Director of Chemistry, Stress & Repair D.. at GSK)
Thanks for helping me better understand leases. Thanks again.
Steve Oroho
(Controller at DLH Holdings Corp)
Presenter read the slides and did not provide much commentary.
Sheila Esposo
(NONE at NONE)
The course was short, informative and very well presented.
Ellen Hynes
(Financial Consultant at TSYS)
Good course. I like how the effect on KPI's was addressed.
Tanya Sweet
(Sr. Consultant, Audit at Carnival Corporation & PLC)
Be prepared with a finance calculator fir the final exam!
Anonymous
(Consultant)
Good overview of leasing. Clear and concise instructor.
Anonymous
(CPA, CFE, CGMA)
Nice course with great illustration of journal entries.
Anonymous
(-)
A lot packed in to a short course. very helpful!
Teresa Spector
(Not Provided at Elsevier)
the narrator just seemed to read fro the slides
Gene Sheets
(Tax and Cash Manager at OVEC)
Liked to keep up to date with new changes.
Rajeev Sahni
(Director - Capital (RWA) at UBS)
detailed information and good presentation
Anonymous
(Chair)
A complex course for introductory purposes
Antonio Crawford
(Senior Internal Auditor - Budget/Busines.. at Individual)
Very well explained, practical, succinct.
Theodore Zeck
(Certified Public Accountant at Theodore R. Zeck, CPA)
A lot of material for a one-hour course.
Anonymous
(CFO)
Good concise presentation of the basics
Anonymous
(Chief Financial Officer)
Not much you can do with Lease subject.
Anonymous
(Fiscal Officer)
i have learned through this course
Matt Osmundsen
(Director of Financial Planning at Baldwin Technology Company, Inc.)
Great course! Very informative.
Anonymous
()
Very informative.
David Farlett
(Chief Financial Officer at AFC Urgent Care)
Informative course
Gwen Clemings
(Senior Consultant at Sirius Solutions, LLP)
Easy to follow.
Mary May
(Assistant Controller at Stephen Gould Corporation)
very informative
Anonymous
(Senior Director & Controller, Finance)
welll presented
Anonymous
(VP, Finance)
great resource
Anonymous
(Accountant)
That is great!
Amy Dyer
(None at None)
good course
Anonymous
(attorney cpa)
Difficult
Patrenia McAbee
(Owner at McAbee Consulting)
Good
Ravi Patel
(Tax Accountant at Patel)
na
Qasim AlQattan
(Senior Internal Auditor at BCFC)
y
Prerequisites
Course Complexity: Intermediate
Prerequisite: Basic proficiency in US GAAP accounting
Advanced Preparation: None
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 .
I don't think the answer to question number 4 on the exam is correct. Lessor's entry for operating lease should be just dr cash/cr rental income, right???
You are correct and that is the answer choice D, debit cash and credit rent revenue.