Accounting for Leases: Identifying a Lease

The FASB Master Glossary defines a lease as: “A contract, or part of a contract, that conveys the right to control the use of identified property, plant, or equipment (an identified asset) for a period of time in exchange for consideration.”
 
What steps need to be taken in order to ensure you have accurately identified a lease? In the second article from our Accounting for Leases Under ASC 842 series, we take a closer look at how to properly evaluate whether a contract is or contains a lease.  

 

What’s inside:

• Three criteria that determine a lease.

• Key concepts to understand such as “period of time.”

• Guidance on what is considered an identified asset.

• Tips for determining the right to control use of an identified asset.

• Restrictions and supplier protective rights.

• Economic criterion of a lease under ASC 842.

• Power criterion of a lease under ASC 842.

• Example illustrations of lease identification.