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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

111 Reviews (458 ratings)Reviews

5
Anonymous Author
This ASC842 summary provides highlights and examples that are easy to understand and retain.
5
Member's Profile
Great examples used to show the difference...what a pain to report.
4
Anonymous Author
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?
3
Anonymous Author
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.
3
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.
3
Anonymous Author
I thought this provided a good overview of the new standard and the key changes to the former accounting standards. I don't think the questions in the final exam that required calculations are fair to those who don't have the tools handy. Questions on the actual guidance would have been more appropriate.
3
Member's Profile
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.
4
Anonymous Author
Haven't done this in years and founds this to be a good refresher reflecting updates. I was able to follow along just fine except in one place (ROU for the straight line operating lease) where I needed to pause the video and try to back into the calculations by hand to understand the computation.
3
Anonymous Author
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.
4
Member's Profile
Content was good. Course provided a good high level summary of the complex new lease accounting standards. The instructor's style was a bit difficult to listen to (straight reading of slides, constant mention of slide number and asking to move to the next slide, frequent "um/uh").
3
Anonymous Author
Overall the material provided was very helpful. The challenge I had was the pace of the program and that the slides were read. It would be good for people who are auditory learners and don't like to read. The slides are very helpful for reviewing the concepts presented.
4
Anonymous Author
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.
4
Anonymous Author
Learned a great deal of knowledge from this course and I thought the test at the end was challenging. I remembered some of this from past classes in school and this was a nice refresher course. The instructor was pretty detailed and easy to follow / understand..
5
Member's Profile
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.
4
Member's Profile
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.
5
Anonymous Author
Although this is a 101 course, I struggled with the JE section of an Lease Straight Lining section on slides 40 - 42. It would be helpful to break it out more as everyone is still getting used to the change. Thank you
5
Member's Profile
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.
5
Anonymous Author
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.
4
Anonymous Author
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.
4
Member's Profile
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.
4
Member's Profile
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.
3
Member's Profile
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.
5
Member's Profile
This is a good overall overview of the accounting requirements for ASC 842. It does a good job of highlighting the key items that you need to be aware of.
4
Member's Profile
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
5
Member's Profile
This was a very good introduction course to the topic. However, I think a few additional examples would better assist in illustrating the rules.
5
Anonymous Author
The presentation was straight forward and clearly presented. Showing examples was good. Reading the slides is not the best presentation style.
5
Anonymous Author
The examples were relevant and easy to follow. Discussed the lessor and the lessee accounting and was relevant to my job as a Controller.
4
Anonymous Author
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.
5
Member's Profile
I thought this was a good course on lease accounting. I would recommend it to anyone looking to learn more about lease accounting.
4
Member's Profile
My one issue was the presenter's pronunciation of a long 'e' on the first syllable of lessor and lessee. Very distracting to me.
4
Member's Profile
Very detailed and informative. Some suggestion on sites to help with PV Calculation and disclosure samples would be beneficial.
3
Member's Profile
Very complex topic. Instructor did a good job of going over it but he could have been better about explaining the PV discounts.
4
Anonymous Author
One of the oldest FASB's still around - great refresher - all accounting personnel needs to know the 4 criteria - well covered.
3
Member's Profile
Overall a decent overview but ambiguities (eg in advantages / disadvantages of leasing) meant it lacked clarity in places.
5
Member's Profile
I wish the calculations were show for PV of lease payments. Liked eh journal entries and real life examples. Good class.
5
Member's Profile
Excellent overview of the new rules. I especially liked the examples which reinforced my understanding of the lesson.
4
Member's Profile
I think that it should state that a calulator is needed to review some of the calculations presented in presentation.
4
Member's Profile
The calculations included in the test component were not beneficial - I would prefer to have the test cover concepts.
4
Member's Profile
Good overview. Wish there had been a table summarizing the accounting and disclosure requirements (a cheatsheet).
4
Anonymous Author
I do not agree with the answer for question number 4. Is that not the correct answer for a lessor, not a lessee?
5
Anonymous Author
A good course to refresh your know-how about leasing topic. Informative, detailed yet concise. Worth the time.
4
Member's Profile
Solid 101 course. Would like to see a table added to the straight line section summarizing the five years.
5
Member's Profile
Good foundational information about accounting for leases that I'll keep in my files for future reference.
3
Anonymous Author
Not the most interesting or well-presented, but. The content is organized and meets the course objectives.
4
Anonymous Author
The fundamentals were explained well. However, the straight-line rent expense entries were not explained.
4
Member's Profile
Short and to the point. Good presentation. Also good that new proposed accounting rules discussed.
5
Anonymous Author
What you would expect for a foundation level course. The questions proved to be a nice refresher.
4
Member's Profile
Good overview of lease accounting, and how to determine and treat the different types of leases.
5
Anonymous Author
This course is very useful and beneficial to my job responsibility. I am glad to have taken it.
4
Member's Profile
Difficulty calculating PV without a calculator. Overall a good refresher on lease accounting
3
Member's Profile
Good by basic...wish there had been a little more focus on some of the implementation issues.
5
Member's Profile
Overall the course was great, but the sound quality wasn't as good as I would have liked.
5
Member's Profile
Toughest course I've taken her so far, but very comprehensive and very recent material.
3
Anonymous Author
I was glad that the course had the updated information on the new and upcoming changes.
5
Member's Profile
Simple topic breakdowns in short segments. Good summary and questions prior to test.
4
Member's Profile
In simple word the instructor was able to pass the proper knowledge about the subject
4
Member's Profile
Content good however pace could have been a little slower with more examples.
5
Member's Profile
Provided a well rounded explanation and the considerations in lease accounting.
3
Member's Profile
There was a whole lot of slides, I would have liked more written out examples.
3
Anonymous Author
Good simple overview, but did not have my financial calculator for the quiz.
5
Member's Profile
I liked the examples and the descriptions and definitions used in the course.
3
Member's Profile
The instructor sped through the course and mostly just read from the slides.
5
Member's Profile
I did not like that the final exam seemed to require a financial calculator.
5
Member's Profile
It was a clearly explained the topic and the financial impact of the changes
4
Member's Profile
General review of lease accounting with examples that are easy to follow.
4
Anonymous Author
The pace was a little too fast, instructor basically just read the slides.
5
Member's Profile
This course was a practical approach to learning accounting under ASC 842
3
Member's Profile
The financial impact of the new lease rules was a very valuable section.
4
Anonymous Author
Decent summary of the new lease rules and overview of lease accounting.
2
Member's Profile
I do not think this provided a valuable course for this complex topic.
5
Anonymous Author
Very Complex. Should have shown how the present values were calculated
3
Member's Profile
Very complicated accounting but a well taught class. Kudos to you.
4
Anonymous Author
Would like more charts and diagrams, very strictly text and tables.
5
Anonymous Author
Very concise and practical presentation. A great refresher course.
4
Member's Profile
Lease accounting is critical for finance staffs of mfg enterprises
5
Anonymous Author
Awesome overview - looking forward to implementing the new rule!
4
Anonymous Author
Great overview on a topic that I will have to address this year.
4
Member's Profile
good material. Controllers should take this, and internal audit
5
Member's Profile
Thanks for helping me better understand leases. Thanks again.
3
Member's Profile
Presenter read the slides and did not provide much commentary.
5
Member's Profile
The course was short, informative and very well presented.
5
Member's Profile
Good course. I like how the effect on KPI's was addressed.
5
Member's Profile
Be prepared with a finance calculator fir the final exam!
4
Anonymous Author
This course provided a good overview of Lease Accounting.
5
Anonymous Author
Good overview of leasing. Clear and concise instructor.
4
Anonymous Author
Nice course with great illustration of journal entries.
5
Member's Profile
The course was very informative and I really enjoyed it
5
Member's Profile
I liked the general overview of the subject matter.
4
Anonymous Author
A lot packed in to a short course. very helpful!
3
Member's Profile
the narrator just seemed to read fro the slides
4
Member's Profile
Liked to keep up to date with new changes.
5
Member's Profile
detailed information and good presentation
3
Anonymous Author
A complex course for introductory purposes
5
Member's Profile
Very well explained, practical, succinct.
5
Member's Profile
A lot of material for a one-hour course.
5
Anonymous Author
Good concise presentation of the basics
Anonymous Author
Not much you can do with Lease subject.
Anonymous Author
i have learned through this course
5
Member's Profile
Great course! Very informative.
5
Anonymous Author
Very informative.
4
Member's Profile
Informative course
5
Member's Profile
Easy to follow.
4
Member's Profile
very informative
4
Anonymous Author
welll presented
5
Anonymous Author
great resource
5
Anonymous Author
That is great!
4
Member's Profile
good course
3
Anonymous Author
Difficult
4
Member's Profile
Good
4
Member's Profile
na
4
Member's Profile
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 .

2 QuestionsCourse Questions and Answers

Member's Profile

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???

Member's Profile

You are correct and that is the answer choice D, debit cash and credit rent revenue.

Course Syllabus
INTRODUCTION AND OVERVIEW
  6:58Introduction to Lease Accounting 101
  1:45Overview of Leasing
Lease Accounting 101
  13:44Lessee Accounting
  8:29Lessor Accounting
  2:14Advantages and Disadvantages of Learning
  3:49Lease Straight Lining
  2:55Financial Statement Disclosure
  9:47Financial Impact of New Lease Rules
CONCLUSION
  3:57Summary
CONTINUOUS PLAY
  53:37New Lease Accounting 101
SUPPORTING MATERIALS
  PDFSlides: Lease Accounting 101
  PDFLease Accounting 101 Glossary/Index
REVIEW & TEST
  quizREVIEW QUESTIONS
 examFINAL EXAM