Lessee Recording of Existing Leases: Finance of Operating

Author: Pat Patterson

CPE Credit:  2 hours for CPAs

This course will define whether there is a lease, even if there are no leases recorded at the present time. If there is a lease, is it a finance lease or an operating lease? Depending on the type of lease, this course will detail how to initially record the “right of use asset” and the lease liabilities of the lessee for existing leases. The correct financial statement treatment of leases is examined.

Publication Date: May 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

  • What is a Lease?
  • Accounting Standards Update 2016”02, Leases (Topic 842)
  • Lessee Accounting
  • In the beginning — recognition and measurement by Lessee
  • Included and Excluded Cost examples for initial direct costs
  • Some examples
  • Accounting Standards Update 2018”01

Learning Objectives

  • Identify the lease recording of existing leases even if there is no lease recorded at present time
  • Recognize the type of lease, how to transition to the "new" standards in ASC 842
  • Recognize how to initially record the "right of use asset" and the lease liabilities of the lessee
  • Describe the correct financial statement treatment of leases
  • Recognize which new leasing standards prescribed by ASU 2016-02 superseded which of the following ASC Topic
  • Describe types of arrangements within the scope of ASC 842
  • Recognize when a lessee should include payments to be made in optional periods
  • Identify which entities are required to use which of the following transition approach with respect to the new standard
  • Identify practical expedients available to entities related to the new lease standard
  • Describe which type of payments should be included, when determining the lease payments for purposes of determining the lease liability
  • Recognize how many months or less the new lease standard does not require lessees to apply the guidance to lease with a term
  • Identify the classification criteria for distinguishing between capital leases and operating leases in the previous leases guidance
  • Identify lease payments related to operating leases which should be classified within which section of an entity's statement of cash flows
  • Describe look-back period
  • Differentiate which type of initial direct cost should be included within the measurement of a right-of-use asset
  • Recognize areas for improvement related to residual value guarantees, lease classification reassessment, and variable lease payments that depend on an index or rate were addressed through the issuance

Level
Basic

Instructional Method
Self-Study

NASBA Field of Study
Accounting (2 hours)

Program Prerequisites
None

Advance Preparation
None

Registration Options
Quantity
Fees
Regular Fee $62.00

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