Accounting For Leases Under The New Standard - New York State Comptroller
Accounting for Leases under the New Standard Government Finance Officers Association Webinar January 10, 2019
2 Agenda Background Definition and scope Lease term Short-term leases Lessee accounting and financial reporting Lessor accounting and financial reporting Variations on lease contracts
3 Background GASB Statement No. 87, Leases, revises existing standards on lease accounting and financial reporting (primarily Statement No. 62) Issued June 2017 Effective for periods beginning after December 15, 2019 Earlier application is encouraged COD section L20 - Leases
4 Why is this a big deal? Definition of leases has changed “Capital” and “operating” lease terminology goes away Must evaluate all current leases and contracts to determine if they meet the GASB 87 definition of a lease Leases previously not reported because they were operating, may now need to be added to the financial statements Standard is to be applied retroactively
5 Why is this a big deal? (cont.) Existing leases must be measured and recognized based on facts and circumstances of the lease in the period of implementation of GASB 87, not inception of the lease. If administration of leases is decentralized across your organization, may be difficult to determine what contracts are subject to the new lease accounting. While net position generally unaffected (lease debt offset by intangible lease asset), the increase in reported debt for lessee governments that currently have operating leases may impact debt limits, covenants, and statutes.
6 GASB Statement No. 87 Establishes single model for lease accounting Underlying foundation - leases are financings Leases no longer classified as operating or capital Exceptions for lessors and lessees Short-term leases Contracts that transfer ownership and do not contain termination options
7 Definition of a Lease A contract that conveys control of the right to use another entity’s nonfinancial asset (the underlying asset) as specified in the contract for a period of time in an exchange or exchange‐like transaction Common nonfinancial assets that are leased Land Buildings Vehicles Equipment
8 Definition of a Lease (continued) Control requires both of the following: (1) the right to obtain the present service capacity from use of the underlying asset, and (2) the right to determine the nature and manner of use of the underlying asset Control applied to the right-to-use lease asset (a capital asset) “specified in the contract” Control criteria NOT limited to contracts that convey substantially all of the present service capacity from use of the underlying asset o Right-to-use lease assets include rights to use underlying assets for portions of time, such as certain days each week or certain hours each day Includes contracts not explicitly defined as “leases”, but that otherwise meet the definition
9 Exclusions from Scope of Leases Intangible assets (mineral rights, patents, copyrights, computer software), except for the sublease of an intangible right-to-use asset Biological assets (including timber, living animals, and living plants Inventory Service concession arrangements (see GASB Statement No. 60, paragraph 4)
10 Exclusions from Scope of Leases (continued) Assets financed with outstanding conduit debt, unless both the asset and the conduit debt are reported by the lessor Supply contracts (such as typical power purchase agreements, which do not convey control of the right to use the underlying power generating facility) Contracts for services, except those contracts that contain both a lease component and a service component
11 Exclusions from Scope of Leases (continued) Certain regulated leases (airport-airline agreements) Leases of assets that are reported as investments (meets requirements of GASB No. 72 to be reported at fair value) Leases that transfer ownership and do not contain termination options 1 Leases
12 Lease Term Noncancelable period during which lessee has right to use the underlying asset Any periods in which the lessee or the lessor has the sole option to terminate lease, if reasonably certain the option will not be exercised by that party Any periods in which the lessee or the lessor has the sole option to extend lease, if reasonably certain the option will be exercised by that party Lease Term
13 Lease Term Ignores fiscal funding or cancellation clause, unless reasonably certain the clause will be exercised Excludes cancelable periods – Periods for which both lessee and lessor have an option to terminate lease without permission from the other party (or if both have to agreed to extend)
14 Reassess Lease Term Reassess lease term only if one or more of the following occurs: Lessee/lessor decides to exercise option that was not originally deemed reasonably certain to be exercised Lessee/lessor decides not to exercise option that was originally deemed reasonably certain to be exercised An event specified in contract that requires an extension or termination has taken place
15 Short-Term Lease Exception Short-term lease At inception, has a “maximum possible term” of 12 months or less, including any options to extend, regardless of the probability the options will be exercised A lease that is cancelable by either party, such as month-to-month or year-to-year lease, the maximum possible term is the noncancelable period, including any notice period
16 Accounting for Short-Term Leases Lessee Recognize lease payments as expenses/ expenditures; asset for advance payments (prepaid); liability for rent due Lessor Recognize lease payments as revenue; liability for advance payment; asset for rent due No recognition of expenditure/expense and revenue during rent holiday No required note disclosures
17 EXAMPLE What is the Lease Term under GASB 87? “This Agreement commences on the first date the Equipment is accepted by the lessee, and ends on the later of the last day of the Minimum Lease Term (“Term”) of ten months, or the Extension Period (as herein defined). At the end of the Term, this Agreement is extended on a month-tomonth basis until the Equipment is returned to the lessor (the “Extension Period”). During the Extension Period the lessor has the right to, on 15 days notice, increase the rate per month . . . . After the end of the Term either party can terminate this Agreement on 15 days written notice.”
18 EXAMPLE What is the Lease Term under GASB 87? “The lessor agrees to lease the vehicle to the lessee for an Initial Term beginning on January 1, 2018 and ending on December 31, 2022. The lessee has the option to renew the lease for five additional years. The lessee shall exercise the option to renew by giving written notice to the lessor not less than ninety (90) days prior to the expiration of the Initial Term.”
19 EXAMPLE What is the Lease Term under GASB 87? “The lessor agrees to lease the vehicle to the lessee for an Initial Term beginning on January 1, 2018 and ending on December 31, 2022. The lessee has the option to renew the lease for five additional years. The lessee shall exercise the option to renew by giving written notice to the lessor not less than ninety (90) days prior to the expiration of the Initial Term.” The lessor or lessee may terminate this lease at any time, with five (5) days written notice.
20 EXAMPLE What is the Lease Term under GASB 87? “The lessor agrees to lease three floors of a building to the lessee for an Initial Term beginning on September 1, 2018 and ending on August 31, 2026. The lessee has the option to renew the agreement for two (2) additional years by giving written notice to the lessor not less than ninety (90) days prior to the expiration of the Initial Term. The lessee may terminate the agreement any time after August 31, 2023 with written notice to the lessor at least ninety (90) days prior to termination.”
Initial Recognition - Overview Assets Lessee Intangible (right‐to‐use) lease asset equal to the value of lease liability lease prepayments made for future periods any direct ancillary costs necessary to place asset into service (not debt issuance costs) Lessor Lease receivable (generally includes same amounts as lessee liability) Continue to report leased asset (capital asset) Liabilities 21 Deferred Inflow of Resources Present value of future lease payments expected to be made during lease term (includes fixed payments, variable payments based on rate or index, reasonably certain residual guarantees, other reasonable certain payments) Equal to lease receivable any prepayments received for future periods
Subsequent Reporting - Overview Assets Liabilities Lessee Amortize intangible right‐to‐use asset in rational and systematic manner over shorter of useful life of the underlying leased asset or lease term, unless a purchase option that is reasonably certain to be exercised. Then, amortize over useful life of underlying asset. Reduce liability for actual lease payments, less amounts for interest expense Lessor Reduce receivable for actual lease payments received, less amounts for accrued interest Depreciate leased asset (unless indefinite life or requirement to be returned in its original or enhanced condition) 22 Deferred Inflow of Resources Recognize lease revenue in a rational and systematic manner over the lease term
23 LESSEE Accounting and Financial Reporting
24 LESSEE Recognition and Measurement At commencement of lease term Economic resources measurement focus (full accrual) Recognize a liability for present value of future lease payments and an intangible right-to-use asset (the leased capital asset) DR Intangible right-to-use lease asset CR Lease liability Current financial resources measurement focus (modified accrual) DR Expenditures – capital outlay CR Other financing sources To record capital expenditure and related financing from lease
LESSEE Initial Measurement 25 Lease Liability Fixed Certain Residual Purchase lease variable value options payments payments guarantees Any other Termination reasonably penalties certain payments
26 LESSEE Initial Measurement (cont.) Lease liability Does not include lease payments dependent on lessee’s future performance or usage of underlying asset Discount future lease liability payments
27 Discount Rate Interest rate charged by lessor (may be implicit in the agreement), or Lessee’s own borrowing rate (if interest rate cannot be readily obtained) Rate implicit in the lease agreement Sum of the present value of lease payments present value of any unguaranteed residual value Sum of the fair value of underlying asset any initial direct costs incurred by lessor (registration, legal, transportation, etc.)
28 What are Lease Incentives? Payments made to, or on behalf of, the lessee for which the lessee has a right of offset with its obligation to the lessor Or other concessions granted to the lessee Rebates/discounts Assumptions of preexisting lease obligations to a thirdparty Other reimbursements of lessee costs Rent holidays Reductions of interest or principal charges by the lessor
29 How Do We Account for Lease Incentives? Payments provided to, or on behalf of, lessee at or before commencement of lease term Include in initial measurement as a reduction of right-to-use asset Payments provided after commencement of lease term Reduce lease payments for periods in which incentive payments will be provided If incentive payments are fixed or fixed in substance oInclude in initial measurement or remeasurement as a reduction of right-to-use asset If variable or contingent lease incentive payments oDo not include in initial measurement of right-to-use asset
30 Example #1 – Government is Lessee Assumptions: Government enters into a five-year lease for capital equipment (60 months) on April 1. Monthly payments of 1,000 are due on the first of every month. Total monthly payments 60,000. First payment due on April 1. Government has the option to purchase equipment for 2,000 at end of lease term, that it is reasonably certain they will exercise. Payment must be made 30 days before end of lease term. Government incurs transportation costs of 2,500 to get equipment ready to place into service. Government estimates the useful life of the equipment at seven years (84 months). Annual interest rate charged on lease is 3%. Government’s fiscal year end is December 31.
31 Step 1 – Calculate the Lease Liability Lease liability present value of future payments expected to be made over lease term (present value of monthly payments present value of 2,000 purchase payment at end) Present value of 1,000 monthly payments 55,791 Rate Interest rate per period (3%/12) Nper Total number of payment periods Pmt Payment made each period Fv Future value Type 1 (payment made at beginning of period
32 Step 1 – Calculate the Lease Liability (cont.) Present value of 2,000 purchase payment at end 1,725 Rate Interest rate per period (3% annual) Nper Total number of payment periods (5 years) Pmt Payment made each period Fv Future value Type 1 (payment made in last month of lease) Present value of lease liability to recognize is 55,791 1,725 57,516
33 Step 2 - Calculate Amortization of Discount on Lease Liability The 1,000 monthly payment is based on the present value of 60,000 due over the 60 months of the lease. Since the lessee government is also liable for the 2,000 purchase option due on the 60th month, the total lease liability to amortize at inception is 57,516. 56,516 x .0025 Payment ‐ Interest The final 3,000 payment represents the 1,000 payment due for the 60th month, plus the 2,000 purchase option due at the end of the lease term. amortization of lease payments Annual interest rate 3.00% monthly rate 0.0025 periods 60 Payment per year 12 Amount 55,791 Payment 1,000 PMT(.0025,60,‐55791,0,1) Payment Number 1 2 3 4 5 6 7 8 9 59 60 Payment 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 3,000 Interest Principal ‐ 141 139 137 135 133 131 128 126 10 7 1,000 859 861 863 865 867 869 872 874 Balance 57,516 56,516 55,657 54,796 53,933 53,068 52,201 51,332 50,460 49,586 990 2,993 2,993 ‐
Step 3 – Calculate the Intangible Right-to-use Lease Asset 57,516 lease liability 2,500 transportation costs to place asset into service 60,016 intangible right-to-use lease asset to record 34
35 Step 4 – Calculate Amortization of Intangible Right-to-use Lease Asset Amortize asset in rational and systematic manner over shorter of life of underlying leased asset or lease term, unless purchase option that is reasonably certain to be exercised. Then, amortize over useful life of underlying asset. amortization of lease asset Lease asset value Useful life (months) Monthly amortization Annual amortization Month Number 1 2 3 4 5 6 7 8 9 60,016 84 714 8,568 Amortization Balance 60,016 714 59,302 714 58,588 714 57,874 714 57,160 714 56,446 714 55,732 714 55,018 714 54,304 714 53,590
36 If Lease Paid from a Governmental Fund Journal entries – April 1 General fund DR Expenditures – capital outlay 57,516 CR Other financing sourceinception of lease 57,516 To record capital expenditure and related financing from lease of equipment DR Expenditures – capital outlay 2,500 CR Cash 2,500 To record expenditure for transportation costs to place asset into service
37 If Lease Paid from a Governmental Fund Journal entries – monthly lease payments General fund On December 31 – Total of 9 months lease payments DR DR Expenditures – debt service principal 7,930 Expenditures – debt service interest 1,070 CR Cash 9,000 To record monthly lease payments based on amortization of lease payments schedule.
Year-end Adjustments for Government-wide Statements DR Intangible right-to-use lease asset 60,016 CR Expenditures – capital outlay To recognize lease asset Other financing source – inception of lease CR Lease liability To recognize lease liability 60,016 DR 57,516 57,516 38
Year-end Adjustments for Government-wide Statements (cont.) DR Lease liability 7,930 CR Expenditures – debt service principal 7,930 To recognize monthly lease payments for principal DR Amortization expense 6,426 CR Intangible right-to-use lease asset 6,426 To amortize intangible right-to-use lease asset over the useful life of the underlying asset 39
40 Summary of Transactions Entry # General Fund Transactions DR/(CR) 1 2 3 Inception of exps to get debt service Total General lease asset in place pmts Fund Cash (2,500) (9,000) (11,500) Lease asset (intangible right‐to‐use) ‐ Lease liability ‐ Expenditures ‐ capital outlay 57,516 2,500 60,016 Expenditures ‐ debt service principal 7,930 7,930 Expenditures ‐ debt service interest 1,070 1,070 Other financing source ‐ inception of lease (57,516) (57,516) Amortization expense ‐ net ‐ ‐ ‐ ‐ Entries 1, 2, 4, 5 are made at the inception of the lease Entries 3, 6, 7 represent the total amount of monthly payments made in the fiscal year. Gov't‐wide adjustments DR/(CR) 4 5 Recognize lease liability 6 7 Recognize Lease Asset lease asset principal pmts amortization 60,016 (57,516) (6,426) 7,930 (60,016) (7,930) 57,516 ‐ ‐ ‐ 6,426 ‐ Total Gov't Wide ‐ 53,590 (49,586) (60,016) (7,930) ‐ 57,516 6,426 ‐ Consolidated totals, accrual (11,500) 53,590 (49,586) ‐ ‐ 1,070 ‐ 6,426 ‐
41 If Lease Paid from a Proprietary Fund Journal entries – April 1 Enterprise fund DR Intangible right-to-use lease asset 60,016 CR Lease liability 57,516 CR Cash 2,500 To record leased right-to-use asset, related liability, and payment of transportation costs to place asset into service
42 If Lease Paid from a Proprietary Fund Journal entries – monthly payments Proprietary funds On December 31 – Total of 9 months lease payments and amortization expense DR DR Lease liability 7,930 Expense – debt service interest 1,070 CR Cash 9,000 To record monthly lease payments based on amortization of lease payments schedule.
43 If Lease Paid from a Proprietary Fund Journal entries – monthly payments (cont.) Enterprise fund DR Amortization expense 6,426 CR Intangible right-to-use lease asset 6,426 To amortize intangible right-to-use lease asset over its useful life
LESSEE—Disclosures 1. General description of leasing arrangements a. Basis, terms, and conditions, on which variable lease payments not included in lease liability are determined b. Existence, terms, and conditions, of any residual value guarantees provided by the lessee 2. Total amount of assets recorded under leases with the related accumulated amortization; disclosed by major class and separately from other capital assets 3. Variable lease payments recognized during the period that are not included in lease liability 44
LESSEE—Disclosures (continued) 5. Other payments recognized during the period that are not included in lease liability (such as residual value guarantees or penalties) 6. Maturity analysis of all future lease payments a. Payments for each of the first five years b. Payments in five-year increments thereafter c. Display principal and interest separately 7. Lease commitments, other than short-term leases, for which the lease term has not yet begun 8. Components of any loss associated with an impairment (gross impairment loss less any related change in lease liability) 45
46 LESSEE – (Example) Note Disclosure The government entered into a five-year lease for capital equipment on April 1, 2018. Monthly payments of 1,000 are due, with the first payment made on April 1, 2018. The government has the option to purchase the equipment for 2,000 at the end of the lease term, which it is reasonable certain it will exercise. The estimated useful life of the equipment is seven years. The annual interest rate charged on the lease is 3%.
47 LESSEE (Example) Capital Assets Note Disclosure Beginning Balance Capital assets not being depreciated Land Construction in progress Total capital assets not being depreciated 11,249,368 5,490,822 16,740,190 Increases ‐ 2,890,542 2,890,542 Decreases Ending Balance (5,872) 11,243,496 (1,675,307) 6,706,057 (1,681,179) 17,949,553 Other capital assets Buildings and improvements 225,636,411 19,755,467 (15,094,265) 230,297,613 Equipment 40,078,664 1,170,842 (15,679) 41,233,827 Intangible right‐to‐use lease asset ‐ 60,016 ‐ 60,016 Total other capital assets at historical cost 265,715,075 20,986,325 (15,109,944) 271,591,456 Less accumulated depreciation for Buildings and improvements (52,010,244) (5,871,627) 13,534,181 (44,347,690) Equipment (20,204,312) (981,565) 15,679 (21,170,198) Less accumulated amortization for intangible right‐to‐use lease asset ‐ (6,426) ‐ (6,426) Total accumulated depreciation and amortization (72,214,556) (6,859,618) 13,549,860 (65,524,314) Other capital assets, net 193,500,519 14,126,707 (1,560,084) 206,067,142 Total capital assets, net 210,240,709 17,017,249 (3,241,263) 224,016,695
LESSEE – (Example) Principal and Interest Requirements to Maturity At December 31, 2018, the principal and interest requirements to maturity are all follows: Fiscal Year Ended December 31 2019 2020 2021 2022 2023 Principal Payments 10,656 10,982 11,316 11,660 4,972 49,586 Interest Payments 1,344 1,018 684 340 28 3,414 Total 12,000 12,000 12,000 12,000 5,000 53,000 48
M32 49 LESSOR Accounting and Financial Reporting
Slide 49 M32 I suggest asking a couple more questions at this point to break things up. MLevine, 12/28/2018
50 LESSOR Recognition and Measurement At commencement of lease term Economic resources measurement focus (full accrual) Recognize a lease receivable and a deferred inflow of resources for present value of future lease payments to be received DR Lease receivable CR Deferred inflow of resources Current financial resources measurement focus (modified accrual) Governmental funds – Recognize deferred inflow of resources as revenue when available
51 LESSOR Recognition and Measurement (cont.) Economic resources measurement focus: Continue to report capital asset underlying the lease Continue to depreciate the asset during lease term, unless the asset has an indefinite life or contract requires lessee to return asset in its original or enhanced condition
52 Discount Rate - Lessor Interest rate lessor charges the lessee Interest rate may be implicit in the agreement Rate implicit in the lease agreement Sum of the present value of lease payments present value of any unguaranteed residual value Sum of the fair value of underlying asset any initial direct costs incurred by lessor (registration, legal, transportation, etc.)
LESSOR Initial Measurement Lease Receivable Fixed lease payments, less any incentives given Certain variable payments Residual value guarantees 53
54 LESSOR Initial Measurement Deferred Inflow of Resources PLUS: Any prepayments received before Lease receivable start of lease term that relate to future periods LESS: Any lease incentives given before start of lease term
55 Example #1 – Government is Lessor Assumptions: Government (lessor) enters into a five-year contract to lease its capital equipment (60 months) on April 1. Monthly payments of 1,000 are due on the first of every month. Total monthly payments 60,000. First payment due on April 1. Lessee has the option to purchase equipment for 2,000 at end of lease term, that it is reasonably certain they will exercise. Payment must be made 30 days before end of lease term. Lessor continues to depreciate the equipment with a historical cost of 60,000 and an estimated useful life of 8 years. Annual interest rate charged on lease is 3%. Government’s fiscal year end is December 31.
56 Step 1 – Calculate the Lease Receivable Calculate in same manner as the lessee calculates the lease liability present value of future payments expected to be received over lease term (present value of monthly payments present value of 2,000 purchase payment at end) Present value of monthly payments 55,791 Rate Interest rate per period Nper Total number of payment periods Pmt Payment made each period Fv Future value Type 1 (payment made at beginning of period
57 Step 1 – Calculate the Lease Receivable (cont.) Present value of 2,000 purchase payment at end 1,725 Rate Interest rate per period Nper Total number of payment periods Pmt Payment made each period Fv Future value Type 1 (payment made in last month of lease) Present value of lease receivable to recognize is 55,791 1,725 57,516
58 Step 2 - Calculate Amortization of the Discount on Lease Receivable The 1,000 monthly payment receivable is based on the present value of 60,000 in payments received over the 60 months of the lease. Since the lessor government will also receive the 2,000 purchase option on the 60th month, the total lease receivable to amortize at inception is 57,516. 56,516 x .0025 Payment ‐ Interest The final 3,000 payment received represents the 1,000 payment received for the 60th month, plus the 2,000 purchase option received at the end of the lease term. amortization of lease payments Annual interest rate 3.00% monthly rate 0.0025 periods 60 Payment per year 12 Amount 55,791 Payment 1,000 PMT(.0025,60,‐55791,0,1) Payment Number 1 2 3 4 5 6 7 8 9 Payment 59 60 Interest 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 3,000 Principal ‐ 141 139 137 135 133 131 128 126 10 7 1,000 859 861 863 865 867 869 872 874 990 2,993 Balance 57,516 56,516 55,657 54,796 53,933 53,068 52,201 51,332 50,460 49,586 2,993 ‐
59 Step 3 - Calculation of Deferred Inflow of Resources Lease receivable - 57,516 Plus, any prepayments received before start of lease 0 Less, any incentives given to lessee before start of lease - 0 Total deferred inflow of resources 57,516
60 Step 4 – Calculate Amortization of Deferred Inflow of Resources Amortize deferred inflow of resources in rational and systematic manner over the lease term. Year 1 amortization expense 8,631 ( 959 x 9 months) Amortization of lease deferred inflow of resources Deferred inflow value 57,516 Lease term (months) 60 Monthly amortization 959 Annual amortization 11,508 Month Number 1 2 3 4 5 6 7 8 9 10 Amortization 959 959 959 959 959 959 959 959 959 959 Balance 57,516 56,557 55,598 54,639 53,680 52,721 51,762 50,803 49,844 48,885 47,926
61 Journal Entry at Inception of Lease Current financial resources measurement focus: General fund – April 1 DR Lease receivable 57,516 CR Deferred inflow of resources 57,516 To record receivable and deferred inflow of resources from the lease of equipment
62 Journal Entry for Monthly Lease Payments Received and Amortization Current financial resources measurement focus: General fund – Year end (9 months for initial fiscal year) DR Cash 9,000 CR Lease receivable 7,930 CR Interest income 1,070 To record receipt of first 9 months of lease payments DR Deferred inflow of resources CR Lease revenue To record lease income 8,631 8,631
63 Journal Entry for Depreciation of Equipment Economic resources measurement focus – Year-end DR Depreciation expense 7,500 CR Accumulated depreciation - buildings 7,500 To record annual depreciation on underlying asset
64 LESSOR—Disclosures Lease activities may be grouped for disclosure purposes 1. A general description of leasing arrangements Basis, terms, and conditions on which any variable lease payments not included in the lease receivable are determined 2. The total amount of inflows recognized in the reporting period from leases, if not displayed on the face of the financial statements
65 LESSOR—Disclosures (cont.) 3. Total amount of inflows recognized in reporting period for variable and other payments not included in measurement of lease receivable 4. If lease payments secure the lessor’s debt, disclose terms, or options by lessee to terminate the lease or abate payments
66 LESSOR—Disclosures (cont.) 5. If lessor’s principal ongoing operations consist of leasing assets to other entities, should disclose: Schedule of future payments included in lease receivable Separate principal from interest Disclose for five subsequent fiscal years separately, thereafter, in five-year increments
67 LESSOR – (Example) Note Disclosure The government entered into a contract to lease its capital equipment for a period of five years beginning on April 1, 2018. Monthly payments of 1,000 will be received, with the first payment received on April 1, 2018. The lessee has the option to purchase the equipment for 2,000 at the end of the lease term, which it is reasonable certain they will exercise. The annual interest rate charged on the lease is 3%.
68 Variations on Lease Contracts
69 Contracts with Multiple Components Report lease and nonlease components as separate contracts Leases with multiple underlying assets Account for as separate contracts Allocate contract price to the different assets if: oLease terms are different for the underlying assets, OR oUnderlying assets are in differing major asset classes for disclosure
70 Contracts with Multiple Components (cont.) Allocate based on contract prices for individual components Based on contract terms, if reasonable If there are no stated prices for individual components, or prices appear unreasonable Use best estimate based on professional judgment If not practicable to determine best estimate, account for components as single lease unit
71 Contract Combinations Contracts entered into at or near the same time with the same counterparty Consider part of the same lease contract if either of the following crite
Payments provided after commencement of lease term Reduce lease payments for periods in which incentive payments will be provided If incentive payments are fixed or fixed in substance oInclude in initial measurement or remeasurement as a reduction of right-to-use asset If variable or contingent lease incentive payments
May 02, 2018 · D. Program Evaluation ͟The organization has provided a description of the framework for how each program will be evaluated. The framework should include all the elements below: ͟The evaluation methods are cost-effective for the organization ͟Quantitative and qualitative data is being collected (at Basics tier, data collection must have begun)
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Guide to auditing the implementation of ASC 842, Leases 2 . 1 Introduction 1.1 Overview This Guide to a uditing the implementation of ASC 842, Leases, is designed to assist teams in auditing an entity's implementation of the new leases standard, Accounting Standards Codification (ASC) 842, Leases
