The recently issued lease standard represents a radical departure from previous lease guidance; many financial statements will recognize potentially significant assets and liabilities for the first time. Implementing FASB's New Lease Standard: A Hands-On, How-To Guide is for industry and public preparers and accountants who need to understand how the new leasing rules will affect their key accounting numbers. This course will help participants understand how the new standard will affect their company or clients and the practical implementation strategies that will ease the burden of transition.
Upon successful completion of this course, participants will be able to:
- Distinguish between capital and operating leases.
- Identify the current approach to accounting for leases.
- Identify changes to the approach for lease recognition under the new standard.
- Distinguish between more-likely-than-not and reasonably-assured thresholds for lease recognition.
- Explain how balance sheets will change as a result of ASU 2016-02.
- Describe the effect on EBITDA of adopting ASU 2016-02.
- Contrast FASB and IASB's approach to income statement recognition for leases expense.
- List the five steps involved in analyzing lease contracts using the control model.
- List the categories of leases that are exempted from ASU 2016-02.
- Distinguish between substantive and protective rights when applying the control model to lease contracts.
- Explain how the concept of substitutability affects the identification of specific, identified assets.
- List the criteria for distinguishing between finance and operating leases in lessee accounting.
- Describe FASB's three practical expedients for separating capital from operating leases.
- Contrast the pattern of expense recognition for capital and operating leases.
- List the amounts a lessee should include in calculating expected payments.
- Explain which leases are eligible for the accounting policy expedient to expense short-term leases.
- Describe the criteria for separating lease payments from service arrangements.
- Distinguish between sales and direct financing type leases and determine the appropriate recognition of revenue in various situations.
- Contrast the balance sheet presentation for sales and direct financing leases.
- List the implementation dates for ASU 2016-02 for public and non-public business entities.
- Describe the modified retrospective transition process involved in implementing ASU 2016-01.
- Explain the transition arrangements for specialized lease situations such as sub-leases and leveraged leases.
- Define a sale-leaseback transaction.
Table of Contents
Chapter 1 – Overview
Current Leasing Guidance
Why are Leases So Complicated?
Major Changes at a Glance
Chapter 1 – Review Questions
Chapter 2 – How Will Companies Be Affected?
Impact on Financial Ratios
Chapter 2 – Review Questions
Chapter 3 – Lessee Accounting
1. Is there a contract?
2. Is there a specific identified asset?
3. Does the lessee have the right to the benefits from the asset?
4. Does the lessee have the right to direct the asset’s operation?
5. Did the lessee design the asset for its exclusive use?
Accounting for Lease-Specific Contractual Provisions
Renewal, Termination, and Purchase Options
Variable Lease Payments
Termination Penalties and Residual Value Guarantees
Leases and Service Contracts
Presentation and Disclosure
Chapter 3 – Review Questions
Chapter 4 – Lessor Accounting
Presentation and Disclosure
Chapter 4 – Review Questions
Chapter 5 – Effective Date and Transition
Chapter 5 – Review Questions
Chapter 6 – Additional Issues in Lease Accounting
Lease Guidance Eliminated
Related Party Leases
Chapter 6 – Review Questions
Review Question Answers and Rationales
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