Appendix H — Roadmap Updates for 2025
The table below summarizes the substantive changes made since the
2023 edition of this Roadmap as a result of FASB standard-setting activities,
discussions regarding implementation matters with the FASB and SEC staffs, and other
practice developments. Throughout the 2025 edition of this Roadmap, most references
and content related to the previous guidance in ASC 840 have been deleted or
replaced to reflect the FASB’s removal of this guidance from the Codification.
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Section
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Title
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Description
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Repurchase Agreements
| Amended
Changing Lanes to clarify
circumstances in which, in a sale with a repurchase
agreement, an arrangement would be accounted for as a
sales-type lease under ASC 842 but sale accounting would not
be achieved under ASC 606. Added Example
2-4 to illustrate lease classification in a sale
with a repurchase agreement. | |
|
Practical Ability to Substitute Alternative
Assets
|
Included additional discussion in
Connecting the Dots regarding
considerations related to a supplier’s sourcing of
alternative assets within a reasonable period of time.
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Lessees
|
Added subsection in Connecting the
Dots to discuss the impact on lease
classification when a lessee elects to apply the practical
expedient in ASC 842-10-15-37.
| |
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Including Noncash Consideration in Lease
Payments
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Incorporated discussion regarding
establishing a reasonable method related to determining (1)
how noncash consideration is measured and (2) when that
measurement should occur. Example 6-4 removed.
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Lease Incentives
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Added discussion regarding payments by a
landlord to a third party for improvements.
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Treatment of Payments to a Lessee When a Lease Is Terminated
and the Lessee Enters Into a New Lease for Similar Assets
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Added Example 6-9 to
demonstrate the lessee’s accounting for termination
penalties paid by an unrelated new lessor. In addition,
incorporated Connecting the
Dots regarding lease incentives that arise
when a lease is terminated and the lessee enters into a
lease for the same assets with a new lessor.
| |
|
Use of a Risk-Free Rate by Lessees That Are
Not PBEs
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Included Connecting the
Dots discussion to address the use of a
risk-free rate for leases denominated in a foreign
currency.
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Substantially All of the Fair Value of the Underlying
Asset
|
Renamed the Connecting the
Dots and added discussion regarding the
application of bright-line thresholds in the determination
of lease classification under ASC 842.
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Impairment of an ROU Asset
|
Expanded Connecting the
Dots to address the applicability of the
guidance in ASC 420 on exit or disposal cost obligations to
nonlease components.
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Applicability of ASC 420 to Operating Leases
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Added Example
8-19 to illustrate scenarios in which a
lessee would or would not apply ASC 420 to nonlease
components within a contract.
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|
Setting the Stage
|
Deleted Connecting the Dots regarding rent concessions
provided as a result of COVID-19.
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Lease Modification With Additional Right of Use and Changes
to Existing Right of Use
|
Added Example
8-21 to illustrate scenarios in which a
lessee and lessor agree to modify a lease in such a way that
(1) an additional right of use is included at its
stand-alone price and the scope of or consideration for the
existing right of use changes and (2) the parties to the
lease cannot account for the additional right of use as a
separate contract.
| |
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Penalty for a Partial Termination
|
Added new Connecting the Dots
addressing penalties for reducing the lease term for one but
not all lease components.
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Amortization of Leasehold Improvements
|
Added subsection to Connecting the
Dots to address considerations related to
leasehold improvements constructed on leased land. Further,
added Examples 8-26, 8-27, and 8-28
illustrating the lessee’s accounting for leasehold
improvements.
| |
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Substantially All of the Fair Value of the Underlying Asset —
ASC 842-10-25-2(d)
|
Included new subsection in
Connecting the Dots to address the
use of bright-line thresholds in the determination of
whether anticipated lease payments represent “substantially
all” of the fair value of the asset.
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Lessor’s Accounting for Certain Leases With Variable Lease
Payments
|
Incorporated new Connecting the
Dots discussions regarding (1) the treatment
of leases with variable payments and (2) types of
arrangements with significant variable lease payments.
| |
|
Evaluation of “Terms and Conditions” and “Facts and
Circumstances”
|
Added new Connecting the
Dots subsection to address changes to terms
and conditions for variable or contingent lease
payments.
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Recognition and Initial Measurement
|
Amended Connecting the
Dots to address considerations related to the
unguaranteed residual value of the underlying asset.
| |
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Subsequent Measurement
|
Deleted Connecting the Dots discussions
regarding accounting considerations before the adoption of
ASU 2021-05. Amended Example
9-12 to remove discussion of the accounting
treatment for leases before the adoption of ASU 2021-05.
| |
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Collectibility
|
Added Example
9-15 to show that disputed charges are
related to the enforceability of terms.
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Accounting for Tenant Improvements and Lease Incentives
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Control of the Underlying Asset Before Lease Commencement
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Added new Connecting the
Dots to address the distinction between an
entity’s control of the underlying asset and an entity’s
control of the use of the underlying asset.
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Repurchase Options
|
Included new Bridging the GAAP to
address sale-and-leaseback considerations related to
repurchase options under IFRS 16.
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Recognition and Measurement
|
Added Changing Lanes to
address transition considerations related to
sale-and-leaseback transactions (discussion moved from
deleted Section 16.9).
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Accounting for Costs Incurred in a Sale-and-Leaseback
Transaction
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New section on accounting for costs incurred by
seller-lessees and buyer-lessors in a sale-and-leaseback
transaction.
| |
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Business Combinations and Legacy Sale-and Leaseback
Transactions
|
Section renamed and amended to streamline discussion of an
acquiror’s accounting for an acquiree’s former
sale-and-leaseback transactions.
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|
Lessee’s Involvement With an Asset Before Lease
Commencement
|
Incorporated new Connecting the
Dots on considerations related to control of
an underlying asset while the asset under construction in an
arrangement involving multiple parties.
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|
Lessee Legally Owns the Asset Being Constructed
|
New section on control of an underlying asset under
construction when the lessee has legal title to either (1)
the property improvements under construction and the land
underlying the improvements or (2) the non-real-estate asset
under construction.
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Lessee Is Leasing the Underlying Land
|
New section discussing the application of the guidance in ASC
842-40-55-5(e).
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Applicability of Build-to-Suit Guidance to the Construction
of Improvements of a Leased Asset During the Lease Term
|
New section on applying the build-to-suit guidance in
scenarios in which improvements to a leased asset are
constructed during the lease term.
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|
Lessee/Intermediate Lessor Is Not Relieved of Its Primary
Obligation Under the Head Lease
|
Added new Connecting the
Dots to address lease assignments involving
the original lessor of the underlying asset.
| |
|
Practical Expedient Related to Accounting for Common-Control
Leases on the Basis of Written Terms and Conditions
|
Moved discussion here from Section 17.3.1.10.1 and
renamed.
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Accounting for Leasehold Improvements for Leases Between
Parties Under Common Control
|
Moved discussion here from Section 17.3.1.10.2.
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Income Taxes
|
Included discussion regarding taxable temporary differences
that may arise when an entity is accounting for an ROU asset
and a lease liability.
| |
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Presentation of Lease Expense for Operating Leases With
Impaired ROU Assets
|
Moved discussion regarding the presentation
of gains or losses upon early termination of an operating
lease to newly created Section
14.2.2.2.3.
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|
Presentation of Lease Expense for Operating Leases Subject to
Abandonment Accounting
|
New section discussing lease expense presentation for
operating leases subject to abandonment accounting.
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Statement of Financial Position
|
Added discussion regarding a lessor’s presentation of
deferred initial direct costs.
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Components of Net Investments in Leases
|
Moved Changing Lanes discussion of
disclosure requirements pertaining to the components of net
investments in leases to a new Connecting the
Dots. Added discussion to further clarify
such disclosure requirements under ASC 842.
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Chapter 16
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Effective Date and Transition
|
Deleted; former Chapter 18, “Reporting
Considerations for SEC Registrants,” is now Chapter 16.
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|
16.1
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Overview
|
Moved to Section
E.3.1.8.
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Chapter 17
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Stakeholder Activities
|
Moved to Appendix
E.
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17.3.1.10.1
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Practical Expedient That Allows the Evaluation of Written
Terms and Conditions of a Common-Control Arrangement
|
Moved discussion to Section 13.2.1 and
renamed.
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17.3.1.10.2
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Accounting for Leasehold Improvements for Leases Between
Parties Under Common Control
|
Moved discussion to Section 13.2.2.
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Differences Between ASC 842 and Previous
Guidance Under ASC 840
|
Added discussion comparing lease classification under ASC 842
with that under the previous leasing guidance in ASC 840. In
addition, included discussion regarding the use of the rate
implicit in the lease and the lease’s incremental borrowing
rate as well as the practical expedient related to using a
risk-free discount rate in lieu of an incremental borrowing
rate.
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Appendix D
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Implementation Activities
|
Deleted.
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Appendix E
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Internal Control Over Financial Reporting
|
Relettered as Appendix D. Amended to remove considerations
related to internal control over financial reporting (1)
during the period before the adoption of ASC 842 and (2)
associated with the adoption of ASC 842.
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Other FASB Activity
|
Added discussion of the FASB’s decision not
to add a project to its technical agenda related to the
accounting for land lease costs during the construction
period.
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Appendix H
|
Q&A Conversion and Example Mapping for the 2023
Update
|
Deleted; former Appendix I, “Roadmap Updates
for 2025,” relettered as Appendix H.
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