Required subscriptions
- US GAAP
ASC 842 comprises five Subtopics, below is an overview of each Subtopic.
842-10 Overall
ASC 842-10 details the scope of the leases guidance and specifies the accounting for leases that fall within the scope of ASC 842. The objective of this Subtopic is “to establish the principles that lessees and lessors shall apply to report useful information to users of financial statements about the amount, timing, and uncertainty of cash flows arising from a lease.”
842-20 Lessee
ASC 842-20 specifies the proper accounting by lessees of leases classified as short-term leases, finance leases, or operating leases. In general, a lessee should recognize a right-of-use asset and a lease liability for each lease. However, a lessee may elect not to apply the recognition requirements to short-term leases, and instead recognize the lease payments over the lease term.
842-30 Lessor
ASC 842-30 specifies the proper accounting by lessors of leases classified as sales-type leases, direct financing leases, or operating leases. For sales-type and direct financing leases, the lessor should derecognize the underlying asset and recognize or defer additional profits and expenses associated with the lease. For operating leases, the lessor should defer initial direct costs at commencement of the lease and recognize lease payments and initial direct costs over the lease term.
842-40 Sale and Leaseback Transactions
ASC 842-40 specifies the accounting for sale and leaseback transactions where an entity (the seller-lessee) transfers an asset to another entity (the buyer-lessor) and leases that asset back from the buyer-lessor.
842-50 Leveraged Lease Arrangements
ASC 842-50 specifies the accounting for leases that meet the definition of leveraged leases in the previous leases guidance in ASC 840.