Lessee Recording of New Leases: Finance and/or Operating

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, this course will detail how to initially record the “right of use asset” and the lease liabilities of the lessee. 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 a lease by the correct definition
• Recognize what to do if there is a lease, and is it a finance lease or an operating lease
• 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
• Describe arrangements within the scope of the new lease standard
• Recognize which lessee cash outflows should be classified within financing activities
• Identify what a lessee is required to recognize, for a finance lease
• Describe the type of initial direct cost should be included within the measurement of a right-of-use asset
• Differentiate types of transactions ASU No. 2018-01 issued in January 2018 provided for a practical expedient
• Identify one of the areas for improvement addressed within ASU No. 2018-10
• Identify how many months or less the leases standard does not require lessees to apply the guidance to arrangements
• Differentiate which ASC topics the new leasing standard prescribed by ASU 2016-02 superseded
• Recognize the main differences between previous GAAP and the new ASC 842
• Describe when a lessee should record lease expense, for an operating lease
• Describe reasonably certain
• Identify correct statements with respect to the changes to lessor accounting under the new standard

Level
Intermediate

Instructional Method
Self-Study

NASBA Field of Study
Accounting (2 hours)

Program Prerequisites
General understanding of lease accounting.

Advance Preparation
None