E.12 Exception for Leveraged Leases Commencing Before the Adoption of ASU 2016-02
Under U.S. GAAP, there is an exception to the basic principles in
ASC 740 that apply to leveraged leases. In accordance with ASC 840-30, the tax
consequences of leveraged leases are incorporated directly into the lease accounting
measurements; therefore, no temporary differences are recognized.
No leases are accounted for as leveraged leases under ASC 842, and
entities are not permitted to account for any new lease arrangements as leveraged
leases after the effective date of ASC 842. This guidance eliminates the difference
between U.S. GAAP and IFRS Accounting Standards on leveraged leases as well as the
related income tax accounting differences. See Section 11.3.4.4 for detailed guidance on
accounting for leveraged leases.
IFRS Accounting Standards do not include the concept of leveraged
leases.