14.1 Overview

Concerns about the lease presentation requirements in ASC 840, particularly those for lessees, provided the impetus for the issuance of ASC 842. Specifically, in developing ASC 842, the FASB decided to remove the classification disparity between operating leases and capital leases, bring all leases onto the balance sheet, and require lessees to recognize lease assets and lease liabilities in the statement of financial position. As indicated in the summary portion of ASU 2016-02, the primary objective of the new presentation requirements is to increase financial statement transparency and give users a more “complete and understandable picture of an entity’s leasing activities.”