Issue 1: Determining the Fair Value of the Underlying Asset by Lessors That Are Not Manufacturers or Dealers
Who: Lessors that are not manufacturers or dealers
What was: ASC 842 originally required all lessors to determine the fair value of leased assets using the Topic 820 Fair Value definition.
What now: ASC 842 reintroduces the ASC 840 Fair Value exception, in which lessors will measure fair value, at lease commencement, as cost, reflecting any applicable volume or trade discounts.
Issue 2: Presentation on the Statement of Cash Flows—Sales-Type and Direct Financing Leases
Who: Lessors within the Scope of ASC 942 [Financial Services]
What was: ASC 842 originally required all lessors to recognize principal payments received from sales-type and direct financing leases in the Operating Activities section of the Statement of Cash Flows.
What now: For affected lessors, the lessor will recognize principal payments received from sales-type and direct financing leases in the Investing Activities section of the Statement of Cash Flows.
Issue 3: Transition Disclosures Related to Topic 250, Accounting Changes and Error Corrections
Who: All entities
What was: ASC 842 originally only excluded annual disclosure requirements related to ASC 250-10-50-1.
What now: Entities do not need to provide transition disclosures for interim periods during the year of ASC 842 adoption, which include the following from Topic 250:
b) Net income (or other appropriate captions of changes in the applicable net assets or performance indicator)
c) Any other affected financial statement line item
d) Any affected per-share amounts
Read the full update here.
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