Leases: Land Easements and Rights-of-Way

Author: Pat Patterson

This course will define whether there is a lease. If there is a lease, is it a finance lease or an operating lease? Depending on the type of lease and what accounting treatment had been used initially (ASC 840 or ASC 842), this course will detail how to record the “right of use asset” and the lease liabilities of the lessee. The correct financial statement treatment of land easements and rights of way are examined.

Publication Date: June 2019

Designed For
Any professional with clients or employers that are lessees and need to know the correct accounting based on the latest pronouncements from the Financial Accounting Standards Board (FASB)

Topics Covered

• Lease definition to include the "rights of way" and land easements
• Finance or operating lease?
• Recording initially of the asset and liability depending on the type of lease
• What are some of the considerations based on past accounting?
• What about lease extensions?
• What are the present value percentages to be used for land easements and rights of way?

Learning Objectives

• Identify a lease by the correct definition
• Identify the correct treatment of land easements and rights of way depending on prior accounting
• Recognize how to record lease assets and liabilities
• Describe how to properly present the assets and liabilities on the financial statements
• Differentiate ASC Topics and how they apply to land easements and the new standard of lease accounting
• Identify which type of transition approach entities are required to use under the new lease standard
• Recognize what a lessee is required to do as it relates to a finance lease
• Describe what a lessee should do when a lessee is measuring assets and liabilities arising from a lease
• Identify key considerations related to land easements and ASC 842
• Differentiate between previous GAAP and the new ASC 842
• Identify a high threshold that is consistent with and intended to be applied in the same way as the reasonably assured threshold in the previous lease guidance
• Recognize the new lease standard effective date for fiscal years beginning after what date for public business entities
• Identify another term for land easement
• Identify an example of a single unit of account with respect to land easements
• Recognize an indicator of an explicitly stated exclusive use provision in a contract

Level
Intermediate

Instructional Method
Self-Study

NASBA Field of Study
Accounting (2 hours)

Program Prerequisites
General understanding of lease accounting.

Advance Preparation
None