Accounting for Leases: Lessees

October 2021

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Previously in our Accounting for Leases Under ASC 842 series, we discussed concepts such as the commencement date, lease term, lease payments, discount rate and how an entity classifies a lease. Once the entity has determined all of those relevant inputs, it can recognize and measure the lease on the balance sheet at the commencement date.

This article outlines specific guidance for lessees provided in ASC 842 and how to comply properly.
 

What’s Inside:

  • Reminder of a lessee’s classification of a lease under ASC 842.
  • Summary of accounting requirements based on lease classification.
  • Definition of a short-term lease and examples of how to identify one.
  • Recognition and initial measurement of a lease for lessees, with examples.
  • Subsequent accounting considerations for lessees, with examples.
  • Outline of remeasurement events, as outlined by the FASB.
  • How to account for variable lease payments based on an index or rate.
  • Process for assessing lease modifications, with examples.
  • An overview of impairment assessments.
  • Summation of derecognition requirements.