Deloitte
Accounting Research Tool
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Chapter 3 — Identifying a Lease

3.3 Identified Asset

3.3 Identified Asset

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In accordance with the definition of a lease in ASC 842, fulfillment of the contract must depend on the use of an identified asset. This is an important concept, as the Board notes in paragraph BC128 of ASU 2016-02, because the customer must know the asset over which it is agreeing to have a right to control the use. Similarly, paragraph BC105(a)(1) of the 2013 leasing exposure draft (ED) explained that in contracts that do not involve an identified asset (e.g., a service), the customer does not have the right to control the use of an asset.
In many cases, the PP&E being leased will be identified by an address, serial number, VIN, GPS coordinates, etc. However, the assessment sometimes may be more complex. The decision tree below illustrates the process an entity should consider when determining whether PP&E is identified in the contract: