Center for Plain English Accounting AICPA s National A&A Resource Center available exclusively to PCPS members
|
|
- Baldric Gardner
- 6 years ago
- Views:
Transcription
1 Report April 19, 2017 Center for Plain English Accounting AICPA s National A&A Resource Center available exclusively to PCPS members Sale-Leaseback Transactions Involving Real Estate Navigating the Twists and Turns We often receive inquiries from our members related to the proper application of the authoritative guidance associated with sale-leaseback transactions. The basic structure of a sale-leaseback is evident from its name the transaction involves the transfer of an asset by an entity (the seller-lessee) to another entity (the buyer-lessor) and the leaseback of the same asset by the seller-lessee. Since the topic is complex, we are covering various aspects of sale-leaseback transactions over multiple reports. In our March 2017 report, we covered the basics of sale-leasebacks that do not involve real estate. In this report, we cover the current guidance for sale-leasebacks that involve real estate. In a future report, we will address the accounting for build-to-suit leases and their relationship to sale-leasebacks. Practice Note: The FASB issued Accounting Standards Update (ASU) , Leases, in February 2016 (codified in FASB ASC 842, Leases). Among other things, ASU amends the guidance related to sale-leasebacks. Importantly, because ASU requires lessees to recognize most leases on their balance sheets (i.e., all leases except for short-term leases if the lessee makes an accounting policy election to use this exception), sale-leasebacks will not provide lessees with a source of off-balance sheet financing under the new guidance. However, sale-leasebacks still may attract interest because a seller-lessee generally will be able to recognize any gain on the sale in full at the sale date and the balance sheet effect of the leaseback may be less significant than that of the asset and related financing. It s also important to understand how existing saleleasebacks will transition to the new lease accounting guidance. For more information, see the Transition to New Lease Accounting Guidance section below.
2 Authoritative Guidance The real estate subsections of FASB Accounting Standards Codification (FASB ASC) , Leases Sale-Leaseback Transactions, provide the authoritative guidance for sale-leasebacks involving real estate, including real estate with equipment. Saleleaseback accounting requires a seller-lessee to record a sale, remove the property from the balance sheet and recognize profit in accordance with the provisions of FASB ASC through In addition, FASB ASC , Property, Plant, and Equipment Real Estate Sales, contains criteria for profit recognition for sales of real estate. It precludes sales recognition in certain circumstances and limits the amount of profit that can be recognized in other circumstances. What is Real Estate? According to FASB ASC , the term real estate includes real estate with property improvements or integral equipment that cannot be removed and used separately from the real estate without incurring significant costs. FASB ASC further clarifies that integral equipment should be evaluated as real estate for purposes of applying the provisions of FASB ASC 840. CPEA Observation: Determining whether equipment constitutes integral equipment is important for reaching a conclusion under FASB ASC as to whether to apply the more stringent provisions for real estate sale-leasebacks rather than the sale-leaseback provisions pertaining to equipment. The phrase cannot be removed and used separately without incurring significant cost contains two distinct concepts: (a) the ability to remove the equipment without incurring significant cost and (b) the ability of a different entity to use the equipment at another location without significant decrease in utility or value. As such, companies should base their assessment of the significance of costs to remove and use equipment separately on an estimate of both: The cost to remove the equipment from its existing location, which includes the cost of repairing damage done to the existing location as a result of the removal The decrease in the value of the equipment as a result of the removal, which, at a minimum, should include the cost to ship and reinstall the equipment at a new site CPEA Observation: Companies should consider the nature of the equipment and the likely use of the equipment by other potential users in determining whether any additional decrease in value exists beyond that associated with the costs to ship and install the equipment.
3 Once the costs to remove equipment from its existing location and the decrease in value of the equipment have been calculated, the seller must determine if these costs are significant. When the combined total of both the cost to remove plus the decrease in value exceeds 10 percent of the fair value of the equipment (installed) the equipment is considered integral equipment. The following illustrates the integral equipment calculation: (Costs incurred on removal, including repairs) + (Greater of loss in fair value upon removal or cost to ship and reinstall) = Total costs Equipment would be considered integral if the total costs are greater than 10% of fair value of equipment (installed). The following example illustrates this calculation: Richards, Inc. leases equipment to Acme Company for use in a manufacturing facility. The fair value of the production equipment (installed) at lease inception is $1,075,000. The estimated cost to remove the equipment after installation (estimate is as of the beginning of the lease term) is $80,000, which includes $30,000 to repair damage to the existing location as a result of the removal. The estimated cost to ship and reinstall the equipment at a new site (estimated as of the beginning of the lease term) is $85,000. Assume that the equipment would have the same fair value (installed) to the seller and a potential buyer. Therefore, there is no decrease in fair value of the equipment beyond the discount a purchaser would presumably require to cover the cost to ship and reinstall the equipment. Richards, Inc. would assess whether or not the production equipment is integral equipment as follows: ($80,000 + $85,000) $1,075,000 = 15.3 percent. Because the cost of removal combined with the diminution in value exceeds 10 percent of the fair value (installed) of the production equipment, the cost to remove the equipment and use it separately is deemed to be significant. Therefore, the production equipment is integral equipment. Is the Sale a Sale? FASB ASC provides that a seller-lessee may only apply sale-leaseback accounting to a transaction involving real estate if the transaction first qualifies as a sale under FASB ASC FASB ASC lays out the underlying principles,
4 indicating that profit on a real estate sale may be recognized in full on the date of sale, only if both of the following conditions are met: The profit is determinable (i.e., collectibility is reasonably assured or the amount that will not be collected can be estimated) The earnings process is virtually complete (i.e., the seller does not have substantial continuing involvement) If these general principles are not met, full profit recognition (and, in some cases, sales recognition) is postponed. FASB ASC describes how to determine whether these general principles have been satisfied and the appropriate accounting to apply in other circumstances. In general, if collectibility is not reasonably assured, profit recognition is deferred until such time as collectibility is assured or cash is collected. If the earnings process is incomplete, profit recognition generally shifts from the time of sale to the time of the seller s performance on the contract. Importantly, a sale would not be recorded if a seller s continued involvement in the property carries essentially the same risks as ownership of the property. FASB ASC provides general guidance on assessing collectibility. In assessing collectibility, a seller must consider the buyer s commitment to pay for the property based on the buyer s initial and continuing investments in the property sold. The seller should also consider other collectibility factors, such as the credit standing of the buyer, the age and location of the property, and the adequacy of cash flow from the property, even if the initial and continuing investments are considered adequate. FASB ASC provides an overview of the detailed guidance that should be followed to meet the conditions set forth above, noting that profit cannot be recognized by the full accrual method until: A sale is consummated (FASB ASC ) The buyer s initial and continuing investments are adequate to demonstrate a commitment to pay for the property (FASB ASC through 40-24) The seller s receivable is not subject to future subordination (FASB ASC ) and The seller has transferred to the buyer the usual risks and rewards of ownership in a transaction that is in substance a sale, and does not have a substantial continuing involvement with the property sold (FASB ASC ) Practice Note: If the transaction does not qualify as a sale, the seller must account for the transaction as a financing transaction or by using the deposit method, depending on which criteria in FASB ASC have not been satisfied. For example, if the initial investment test is not met, the deposit method should be applied. Alternatively, if a
5 transaction does not qualify as a sale because it includes an option to repurchase the property, it may be appropriate to account for the transaction as a financing transaction, a lease, or a profit-sharing arrangement rather than as a sale. Does the Transaction Qualify for Sale-Leaseback Accounting? Once it is determined that the transaction qualifies as a sale under FASB ASC , the transaction must be evaluated under FASB ASC For transactions involving real estate to qualify for sale-leaseback accounting, the transaction must satisfy each of the following criteria: The leaseback must be deemed to be a normal leaseback The sale-leaseback agreement must include payment terms and provisions that adequately demonstrate the buyer-lessor s initial and continuing investment in the property acquired Payment terms and provisions must transfer all of the risks and rewards of ownership as demonstrated by the absence of any continuing involvement by the seller-lessee other than a normal leaseback Normal Leaseback A normal leaseback is defined as a lessee-lessor relationship that involves the active use of the property by the seller-lessee in consideration for rental payments, including contingent rents that are based on future operations of the seller-lessee. The property leased back must be used during the lease term in the seller-lessee s trade or business, and any subleasing of the leased back property must be minor, regardless of whether the seller-lessee s business is leasing real estate. Otherwise, the sale and lease do not qualify as a sale-leaseback. Subleasing is considered minor if the present value of the sublease rental payments is not more than 10 percent of the fair value of the property sold. If the present value of the sublease rental payments exceeds 10 percent, the transaction should be accounted for as a financing or by using the deposit method. CPEA Observation: The real estate sale-leaseback provisions apply regardless of whether the seller-lessee leases back all or some portion of the property sold, as well as if the leaseback is a capital or operating lease. For example, if the property sold is a tenfloor office building and five floors are leased back, sale-leaseback accounting for real estate sale-leaseback transactions under the provisions of FASB ASC is applicable. If the leaseback is considered minor, (i.e., the present value of the rental payments is less than 10 percent of the total property s fair value and no prohibited forms of continuing involvement exist), the sale and leaseback would be treated as separate transactions and any gain would be recognized currently, assuming that the provisions of FASB ASC are met. If a prohibited form of continuing involvement exists, the seller
6 would account for the transaction under the deposit method or as a financing even if the leaseback is minor. Initial and Continuing Investment The initial and continuing investments should give the buyer-lessor a large enough stake in the property that the risk of loss through default motivates the buyer-lessor to honor its obligation to the seller-lessee. The buyer-lessor s initial investment is considered adequate when the buyer-lessor has demonstrated both: A commitment to pay for the property A reasonable likelihood that the seller-lessee will collect the receivable CPEA Observation: The adequacy of the initial investment is determined by its composition and size. The buyer-lessor also must continue to demonstrate a commitment to pay for the property after the initial investment is made. To show this commitment, the buyer-lessor is required to increase its investment in the property each year. The buyer-lessor s continuing investment is considered adequate when the buyer-lessor is contractually required to pay each year on its total debt an amount at least equal to level annual payments necessary to fund principal and interest. These payments should result in the amortization of the total debt over a maximum term of: Twenty years for land The customary amortization term of a first mortgage loan by an independent, established lending institution for property other than land Continuing Involvement In a real estate sale-leaseback, if the seller-lessee has any continuing involvement with the property at the inception of the agreement (other than a normal leaseback ), the seller would be precluded from accounting for the transaction as a sale. Instead, the transaction would be accounted for either as a financing transaction or by using the deposit method. If a form of continuing involvement discussed below arises at a later date, it should be evaluated to determine if it was initially contemplated when the sale-leaseback agreement originated. CPEA Observation: A contingent form of continuing involvement still is considered continuing involvement that results in a failed sale-leaseback. For example, if the lessee is required to offer to purchase the property from the lessor or the lessor has an obligation or option to offer the property for sale to the lessee as a remedy or consequence of a
7 default, this would represent a form of continuing involvement the likelihood of default occurring is not relevant. FASB ASC through provides examples of continuing involvement (not all-inclusive) that would prohibit sales recognition and instead require accounting as a financing transaction or by using the deposit method include: The seller-lessee has the right to continue to extend the lease, at a fixed-price rental, for substantially all (i.e., 90 percent or more) of the asset s remaining economic life The existence of an option to repurchase the property sold, even though the exercise price is equal to the then fair value of the property at the date the option is exercised (a right of first refusal generally does not constitute an option to repurchase) An obligation on the part of the seller-lessee to repurchase the property sold, or the ability of the buyer-lessor to compel the seller-lessee to repurchase the property at any time in the future The seller-lessee or a party related to the seller-lessee guarantees the buyerlessor s investment or a return on that investment for either a limited or extended period of time (e.g., a guarantee by the parent company of a lease entered into by a subsidiary of the parent constitutes a form of continuing involvement) Payments required by the seller-lessee for a decline in the fair value of the property, including a guaranteed residual value Any form of continuing ownership in the property (e.g., if the seller-lessee sold the property to a partnership in which the seller has a partnership interest, no matter how minor, sales recognition would be prohibited) The seller-lessee provides non-recourse financing to the buyer-lessor for any portion of the sales price or provides recourse financing in which the only recourse available to the seller is the property sold (this provision also applies to financial institutions that in the normal course of business provide real estate financing) The seller-lessee is not relieved of its obligation under any existing debt related to the property (e.g., if the seller-lessee remains secondarily liable on outstanding indebtedness related to the property sold, sales accounting is prohibited) The seller-lessee provides collateral to lenders or the buyer-lessor other than the property directly involved in the sale-leaseback transaction, or the seller-lessee (or a related party to the seller-lessee) guarantees the buyer-lessor s debt The seller-lessee s rental payments are contingent on some predetermined or determinable level of future operations of the buyer-lessor The seller-lessee enters into a sale-leaseback of real estate that also involves property improvements or integral equipment without selling or leasing the underlying land to the buyer-lessor
8 The seller-lessee is required to initiate or support operations or continues to operate the property at its own risk, for an extended period, for a specified limited period, or until a specified level of operations has been achieved (e.g., until rentals of a property are sufficient to cover operating expenses and debt service) Any provision or circumstance that allows the seller-lessee to participate in any future profits of the buyer-lessor or the appreciation of the leased property (e.g., a situation in which the seller-lessee owns or has an option to acquire any interest in the buyer-lessor) CPEA Observation: FASB ASC expands the definition of prohibited continuing involvement from FASB ASC and provides that if a seller-lessee has any continuing involvement with the property, other than a normal leaseback, the seller is precluded from accounting for the transaction as a sale. Therefore, a transaction in which the seller has continuing involvement, such as a support obligation for a limited period or a right to participate in future profits, may qualify as a sale under FASB ASC , but would not qualify to be accounted for as a sale-leaseback transaction under FASB ASC Account for the Transaction If there is a prohibited form of continuing involvement by the seller-lessee, FASB ASC requires that the transaction be accounted for either as a financing transaction or by using the deposit method. CPEA Observation: FASB ASC includes example journal entries to account for transactions using both the financing and deposit methods; however, the implementation guidance does not provide all supporting calculations. In order to provide additional clarity in understanding how the amounts in those entries are determined, the CPEA has prepared an Excel workbook which includes the journal entries and calculations used for both methods, which can be accessed on our website by clicking here. Financing Transaction When a transaction is accounted for as a financing, the asset subject to the saleleaseback remains on the balance sheet of the seller-lessee and continues to be depreciated. Sale proceeds are recorded as a liability. Lease payments less the portion considered to be interest expense decrease the financing liability, and collections on any buyer-lessor s note increase the financing liability.
9 Deposit Method In certain real estate sales situations, FASB ASC specifically requires the use of the deposit method of accounting. For example, use of the deposit method is required if all conditions precedent to closing have not been performed. Under the deposit method, any down payment and payments of principal and interest received are recorded as a deposit liability. Lease payments decrease and collections on any buyer-lessor s note increase the deposit liability account. The property would continue to be recognized in the seller-lessee s balance sheet and the seller-lessee would continue to depreciate the property. Gain Recognition A transaction that qualifies for sales recognition under FASB ASC and as a saleleaseback under FASB ASC is accounted for using sale-leaseback accounting by the seller-lessee whether the leaseback is classified as a capital lease or an operating lease. The approach is first to determine the gain that would be recognized for the sale of real estate under FASB ASC as if the transaction were a sale without a leaseback. The total gain is recognized immediately if the leaseback is considered minor (i.e., the present value of the rental is less than 10 percent of the fair value of the property sold). If the leaseback is other than minor but less than substantially all, the gain to be recognized currently is the amount of gain in excess of (a) the present value of the minimum lease payments if the leaseback is classified as an operating lease or (b) the recorded amount of the leased asset if the leaseback is classified as a capital lease. Any deferred profit where the leased asset is land only is amortized on a straight-line basis over the lease term. Otherwise, any deferred profit is amortized: (a) in proportion to the amortization of the leased asset for a capital lease; and (b) in proportion to the related gross rental charged to expense over the lease term for an operating lease. CPEA Observation: If the rentals under the lease agreement are unreasonable in relation to market conditions at the inception of the lease, FASB ASC a requires an appropriate amount be deferred or accrued (by adjusting the profit or loss on the sale) and amortized as an adjustment of those rentals. Transition to New Lease Accounting Guidance As mentioned above, ASU will substantially change the accounting for saleleasebacks. Under the new lease accounting guidance, both the seller-lessee and the buyer-lessor are required to apply FASB ASC 842 and certain provisions in FASB ASC 606, Revenue from Contracts with Customers, to determine whether to account for a saleleaseback as a sale and purchase of an asset, respectively. In other words, the buyerlessor is required to evaluate whether a sale of the underlying asset has occurred based on the sale guidance in the new revenue recognition standard and, if a sale has not
10 occurred, to account for the transaction as a financing arrangement. Under current U.S. GAAP, a failed sale for the seller-lessee is not accounted for as a failed purchase by the buyer-lessor. Also, under the new standard, there will be no specialized guidance for saleleasebacks of real estate. Importantly, a transaction previously accounted for as a sale and leaseback under FASB ASC 840 will not have to be reassessed to determine whether it would have qualified as a sale (or purchase) under the guidance in FASB ASC 606 (as required by FASB ASC 842). However, a sale-leaseback previously accounted for as a failed sale and leaseback in accordance with FASB ASC 840 should be reassessed to determine whether a sale would have occurred at any point on or after the beginning of the earliest period presented in the financial statements under the guidance in FASB ASC 842. If a sale would have occurred, the seller is required to recognize any deferred gain or loss that exists as of the later of (1) the earliest period presented or (2) the date of the sale of the underlying asset as follows: If the underlying asset is land only, on a straight-line basis over the remaining lease term If the underlying asset is not land only and the leaseback is a finance lease, in proportion to the amortization of the right-of-use asset If the underlying asset is not land only and the leaseback is an operating lease, in proportion to the total lease cost The seller recognizes any deferred gain or loss resulting from off-market terms as an adjustment to the leaseback right-of-use asset (loss) or lease liability (gain) as of the date of initial application. Any deferred gain or loss not resulting from off-market terms is recognized as a cumulative-effect adjustment to opening equity (if the transaction occurred before the earliest year presented) or earnings in the comparative period (if the transaction occurred within one of the comparative periods presented). Center for Plain English Accounting aicpa.org/cpea cpea@aicpa.org The CPEA provides non-authoritative guidance on accounting, auditing, attestation, and SSARS standards. Official AICPA positions are determined through certain specific committee procedures, due process and extensive deliberation. The views expressed by CPEA staff in this report are expressed for the purposes of providing member services and other purposes, but not for the purposes of providing accounting services or practicing public accounting. The CPEA makes no warranties or representations concerning the accuracy of any reports issued. Copyright 2017 by American Institute of Certified Public Accountants, Inc. New York, NY All rights reserved. For information about the procedure for requesting permission to make copies of any part of this work, please cpea@aicpa.org with your request. Otherwise, requests should be written and mailed to the Center for Plain English Accounting, AICPA, 220 Leigh Farm Road, Durham, NC
Center for Plain English Accounting
Report April 18, 2018 Center for Plain English Accounting AICPA s National A&A Resource Center Debits and Credits Associated with New Lease Accounting Standard CPEA Lease Standard Implementation Series
More informationCenter for Plain English Accounting AICPA s National A&A Resource Center available exclusively to PCPS members
REPORT February 22, 2017 Center for Plain English Accounting AICPA s National A&A Resource Center available exclusively to PCPS members ASU 2017-04: Goodwill Simplifications Implementation Considerations
More informationLease & Finance Accountants Conference. September The Westin Charlotte Charlotte, NC
Lease & Finance Accountants Conference September 11-13 The Westin Charlotte Charlotte, NC H A N D O U T S Lessor Accounting under ASC 842 EQUIPMENT LEASING AND FINANCE ASSOCIATION Presenters Rod Hurd Chief
More informationLeases: Overview of the new guidance
Leases: Overview of the new guidance Prepared by: Richard Stuart, Partner, National Professional Standards Group, RSM US LLP richard.stuart@rsmus.com, +1 203 905 5027 March 2, 2016 Introduction On February
More informationThe Impact of the New Revenue Standard on Real Estate Sales
The Impact of the New Revenue Standard on Real Estate Sales Wing W. Poon Montclair State University In May 2014, the FASB and the IASB jointly issued significantly revised standard on revenue recognition.
More informationIn February 2016, FASB issued Accounting Standards. An Analysis of the New Sale and Leaseback Guidance. DEPARTMENTS I Accounting.
An Analysis of the New Sale and Leaseback Guidance By Josef Rashty In February 2016, FASB issued Accounting Standards Update (ASU) 2016-02, Leases (Topic 842). Topic 842 will supersede the existing lease
More informationReal Estate Syndication Income 19,451 NOTE
Real Estate Syndication Income 19,451 Section 10,500 Statement of Position 92-1 Accounting for Real Estate Syndication Income February 6, 1992 NOTE Statements of Position of the Accounting Standards Division
More informationNew Accounting Rules for Nonfinancial Asset Sales
On February 22, 2017, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2017-05, Other Income Gains and Losses from the Derecognition of Nonfinancial Assets (Subtopic
More informationTopic 842 Technical Corrections Summary of Comments Received
Contact(s) David Hoyer Co-Author Ext. 462 Andy Bologna Co-Author Ext. 356 Thomas Faineteau Co-Author Ext. 362 Chris Roberge Co-Author Ext. 274 Amy Park Co-Author Ext. 476 Shayne Kuhaneck Assistant Director
More informationApplying the new lease accounting standard
Applying the new lease accounting standard In February 26, the FASB issued Accounting Standards Update (ASU) No. 26-, Leases (codified as Accounting Standards Codification Topic (ASC) 842). ASC 842 introduces
More informationWhat private companies need to know about applying the new lease standard
What private companies need to know about applying the new lease standard In February 26, the FASB issued Accounting Standards Update (ASU) No. 26-, Leases (codified as Accounting Standards Codification
More informationFASB and IASB Continue Making Decisions on Lease Accounting
Accounting Journal Entry FASB and IASB Continue Making Decisions on Lease Accounting March 28, 2011 At recent meetings, the FASB and IASB (the boards ) have continued to make progress on the leases project,
More informationNew leases standard ASC 842 Lessee - operating leases. Itai Gotlieb, Partner, Professional Practice July 2017
ASC 842 Lessee - operating leases Itai Gotlieb, Partner, Professional Practice July 2017 Overview Under Accounting Standards Codification (ASC) 842, Leases, lessees recognize assets and liabilities for
More informationLease accounting scope & impacts
Leasing Lease accounting scope & impacts Scope What s in? All industries, all entities Arrangements that meet the definition of a lease Embedded leases within other arrangements What s out? Leases of:
More informationTechnical Line FASB final guidance
No. 2016-03 31 March 2016 Technical Line FASB final guidance A closer look at the new leases standard The new leases standard requires lessees to recognize most leases on their balance sheets. What you
More informationBuild-to-suit leases Issues In-Depth
Build-to-suit leases Issues In-Depth US GAAP February 2017 kpmg.com/us/frv member firms affiliated with KPMG International Cooperative ( KPMG International ), a Swiss entity. NDPPS 64108. Contents Navigating
More informationExecutive Summary. New leases standard Lessees
Executive Summary December 2018 The new leases standard focuses on increased transparency and comparability providing financial statement users with more information about an entity s leasing activities.
More informationTechnical Line FASB final guidance
No. 2016-09 14 April 2016 Technical Line FASB final guidance How the FASB s new leases standard will affect health care entities In this issue: Overview... 1 Key considerations... 3 Scope and scope exceptions...
More informationThe joint leases project change is coming
No. 2010-4 18 June 2010 Technical Line Technical guidance on standards and practice issues The joint leases project change is coming What you need to know The proposed changes to the accounting for leases
More informationHeads Up. FASB Draws a Bright Line Through Operating Leases Proposed ASU Revamps Lease. Accounting. The ED, released by the FASB as a proposed
August 17, 2010 Volume 17, Issue 27 Heads Up In This Issue: Background Effective Date In a Nutshell Scope Lessee Accounting Lessor Accounting Presentation and Disclosures Transition The ED, released by
More informationReal estate sales. Financial reporting developments. Accounting Standards Codification (prior to the adoption of ASU )
Financial reporting developments A comprehensive guide Real estate sales Accounting Standards Codification 360-20 (prior to the adoption of ASU 2014-09) Revised September 2017 To our clients and other
More informationTechnical Line FASB final guidance
No. 2018-08 20 September 2018 Technical Line FASB final guidance How the new leases standard affects engineering and construction entities In this issue: Overview... 1 Key considerations... 2 Scope and
More informationDefining Issues. FASB Completes Technical Redeliberations on Leases. October 2015, No Key Facts. Key Impacts
Defining Issues October 2015, No. 15-47 FASB Completes Technical Redeliberations on Leases The FASB met on October 7 to discuss comments received and related follow-up issues on the external review of
More informationFSA Faculty Consortium Technical Accounting Update. Bob Uhl, partner, Deloitte & Touche LLP
FSA Faculty Consortium Technical Accounting Update Bob Uhl, partner, Deloitte & Touche LLP Deloitte University May 30, 2014 Acronyms Acronym ASC ASU ED FASB IASB IFRS U.S. GAAP Full Form Accounting Standards
More informationORIGINAL PRONOUNCEMENTS
Financial Accounting Standards Board ORIGINAL PRONOUNCEMENTS AS AMENDED FASB Technical Bulletin No. 88-1 Issues Relating to Accounting for Leases: Time Pattern of the Physical Use of the Property in an
More informationSomething Borrowed, Something New Get Ready for the New Lease Accounting Standard
April 2016 Something Borrowed, Something New Get Ready for the New Lease Accounting Standard By Scott G. Lehman, CPA, and David E. Wentzel, CPA Audit / Tax / Advisory / Risk / Performance Smart decisions.
More informationLease & Finance Accountants Conference. September The Westin Charlotte Charlotte, NC
Lease & Finance Accountants Conference September 11-13 The Westin Charlotte Charlotte, NC H A N D O U T S Basic Principles of Lessors under ASC 842 Mamta Shori, Wells Fargo Equipment Finance Joe Sebik,
More informationby Trevor Farber and Scott Streaser, Deloitte & Touche LLP FASB Accounting Standards Update No , Revenue From Contracts With Customers.
July 2, 2014 Volume 21, Issue 17 Heads Up In This Issue: Background Key Accounting Issues Effective Date and Transition Challenges for Entities That Account for Real Estate Transactions Thinking Ahead
More informationIFRS 16 LEASES. Page 1 of 21
IFRS 16 LEASES OBJECTIVE The objective is to ensure that lessees and lessors provide relevant information in a manner that faithfully represents those transactions. This information gives a basis for users
More informationTechnical Line FASB final guidance
No. 2019-01 3 January 2019 Technical Line FASB final guidance How the new leases standard affects automotive entities In this issue: Overview... 1 Recent standard setting activity... 2 Key considerations...
More informationNo February Leases (Topic 842) An Amendment of the FASB Accounting Standards Codification
No. 2016-02 February 2016 Leases (Topic 842) An Amendment of the FASB Accounting Standards Codification The FASB Accounting Standards Codification is the source of authoritative generally accepted accounting
More informationImplementing the New Lease Guidance
Implementing the New Lease Guidance October 22, 2018 2018 Crowe LLP 2018 Crowe LLP Agenda Background Scope Effective dates & transition requirements Lessee accounting model Lessor accounting model Specialized
More informationTechnical Line FASB final guidance
No. 2018-15 6 December 2018 Technical Line FASB final guidance How the new leases standard affects consumer products and retail entities In this issue: Overview... 1 Recent standard-setting activity...
More informationLEASES WHERE ARE WE? Steve Rathjen
LEASES WHERE ARE WE? Steve Rathjen 267 256-3110 srathjen@kpmg.com Agenda Project status Lease definition and classification Lessee accounting Lessor accounting Presentation, disclosures, and transition
More informationInternational Financial Reporting Standard 16 Leases. Objective. Scope. Recognition exemptions (paragraphs B3 B8) IFRS 16
International Financial Reporting Standard 16 Leases Objective 1 This Standard sets out the principles for the recognition, measurement, presentation and disclosure of leases. The objective is to ensure
More informationThe Substance of the Standard
The Substance of the Standard Mayer Hoffman McCann P.C. An Independent CPA Firm TM A publication of the Professional Standards Group April 2014 Accounting Election for Common Control Leasing Arrangements
More informationImpact of lease accounting changes to corporate real estate
Impact of lease accounting changes to corporate real estate Overview In February 2016, the Financial Accounting Standards Board (FASB) issued its long-awaited revision to lease accounting Accounting Standards
More informationLeases Refashioned. The Bottom Line. Retail & Distribution Spotlight January In This Issue
Retail & Distribution Spotlight January 2017 In This Issue Background Key Issues Challenges Thinking Ahead Contacts Leases Refashioned The Bottom Line On February 25, 2016, the FASB issued its new leases
More information2018 Accounting & Auditing Update P R E S E N T E D B Y : D A N I E L L E Z I M M E R M A N & A N D R E A S A R T I N
2018 Accounting & Auditing Update P R E S E N T E D B Y : D A N I E L L E Z I M M E R M A N & A N D R E A S A R T I N AGENDA Leases FASB & GASB Revenue Recognition FASB 2 FASB ASU 2016-02, Leases (Topic
More informationIn December 2003 the IASB issued a revised IAS 17 as part of its initial agenda of technical projects.
IFRS Standard 16 Leases In April 2001 the International Accounting Standards Board (IASB) adopted IAS 17 Leases, which had originally been issued by the International Accounting Standards Committee (IASC)
More informationGASBs Presented by: William Blend, CPA, CFE
GASBs 87-89 Presented by: William Blend, CPA, CFE Leases: Statement 87 Effective Date and General Implementation Effective for Florida fiscal year end 2021. Earlier application is encouraged. Leases should
More informationTechnical Line FASB final guidance
No. 2016-11 14 April 2016 Technical Line FASB final guidance How the FASB s new leases standard will affect real estate entities In this issue: Overview... 1 Key considerations... 2 Scope and scope exceptions...
More informationREAL ESTATE PERSPECTIVE ON NEW LEASE ACCOUNTING STANDARDS
VALUATION & ADVISORY REAL ESTATE PERSPECTIVE ON NEW LEASE ACCOUNTING STANDARDS BY JOHN CORBETT, MAI, ASA, FRICS AND MARC R. SHAPIRO, MAI, MRICS INTRODUCTION The Financial Accounting Standards Board (FASB)
More informationChapter 15 Leases 15-1
Chapter 15 Leases 1. Why Leasing sometimes makes more sense 2. The accounting issues in recording a lease transaction 3. The types of contractual provisions in lease 4. The lease classification: capital
More informationEITF ABSTRACTS. [Nullified by FIN 46 and FIN 46(R) for entities within the scope of FIN 46 or FIN 46(R)]
EITF ABSTRACTS Issue No. 90-15 Title: Impact of Nonsubstantive Lessors, Residual Value Guarantees, and Other Provisions in Leasing Transactions [Nullified by FIN 46 and FIN 46(R) for entities within the
More information2005 ELA Accounting Conference
2005 ELA Accounting Conference HOT TOPICS: LESSEE ISSUES Kimber Bascom Randy Green Bob Keyes KPMG Deloitte & Touche USBancorp 212-909-5664 203-761-3574 415-925-4713 Agenda FSP FAS 13-b EITF 05-06 Lessee
More informationSri Lanka Accounting Standard - SLFRS 16. Leases
Sri Lanka Accounting Standard - SLFRS 16 Leases CONTENTS from paragraph SRI LANKA ACCOUNTING STANDARD - SLFRS 16 LEASES INTRODUCTION OBJECTIVE 1 SCOPE 3 RECOGNITION EXEMPTIONS 5 IDENTIFYING A LEASE 9 Separating
More informationTechnical Line FASB final guidance
No. 2018-18 13 December 2018 Technical Line FASB final guidance How the new leases standard affects life sciences entities In this issue: Overview... 1 Key considerations... 2 Scope and scope exceptions...
More informationFinancial Reporting Advisors, LLC 100 North LaSalle Street, Suite 2215 Chicago, Illinois
Financial Reporting Advisors, LLC 100 North LaSalle Street, Suite 2215 Chicago, Illinois 60602 312.345.9101 www.finra.com VIA EMAIL TO: director@fasb.org Technical Director Financial Accounting Standards
More informationLKAS 17 Sri Lanka Accounting Standard LKAS 17
Sri Lanka Accounting Standard LKAS 17 Leases CONTENTS SRI LANKA ACCOUNTING STANDARD LKAS 17 LEASES paragraphs OBJECTIVE 1 SCOPE 2 DEFINITIONS 4 CLASSIFICATION OF LEASES 7 LEASES IN THE FINANCIAL STATEMENTS
More informationIn December 2003 the Board issued a revised IAS 17 as part of its initial agenda of technical projects.
IFRS 16 Leases In April 2001 the International Accounting Standards Board (the Board) adopted IAS 17 Leases, which had originally been issued by the International Accounting Standards Committee (IASC)
More informationDeloitte & Touche LLP
695 East Main Street Stamford, CT 06901-2141 Tel: + 1 203 708 4000 Fax: + 1 203 708 4797 www.deloitte.com Ms. Susan M. Cosper Technical Director Financial Accounting Standards Board 401 Merritt 7 P.O.
More informationThe Financial Accounting Standards Board
V A L U A T I O N How the New Leases Standard May Impact Business Valuations By Judith H. O Dell, CPA, CVA The Financial Accounting Standards Board issued the 485 page Leases Standard (Topic 842) in February,
More informationLease Accounting Standard Update ASU Presented by: Nicholas Hoefel, CPA Manager, Audit Services Group
Lease Accounting Standard Update ASU 2016-02 Presented by: Nicholas Hoefel, CPA Manager, Audit Services Group 1 Overview Introduction Background and current environment Effective dates and transition Key
More informationOriginal SSAP and Current Authoritative Guidance: SSAP No. 22
Statutory Issue Paper No. 22 Leases STATUS Finalized March 16, 1998 Original SSAP and Current Authoritative Guidance: SSAP No. 22 Type of Issue: Common Area SUMMARY OF ISSUE 1. Current statutory accounting
More informationSri Lanka Accounting Standard LKAS 40. Investment Property
Sri Lanka Accounting Standard LKAS 40 Investment Property LKAS 40 CONTENTS SRI LANKA ACCOUNTING STANDARD LKAS 40 INVESTMENT PROPERTY paragraphs OBJECTIVE 1 SCOPE 2 DEFINITIONS 5 CLASSIFICATION OF PROPERTY
More informationAccounting and Auditing Update. Tennessee Chapter of hfma Spring Institute 2016 Presented by William C. Matheney FHFMA CPA and Meredith P.
Accounting and Auditing Update Tennessee Chapter of hfma Spring Institute 2016 Presented by William C. Matheney FHFMA CPA and Meredith P. Cate Today s Objectives Present an overview of pertinent recently
More informationRE: Proposed Accounting Standards Update, Leases (Topic 842): Targeted Improvements (File Reference No )
KPMG LLP Telephone +1 212 758 9700 345 Park Avenue Fax +1 212 758 9819 New York, N.Y. 10154-0102 Internet www.us.kpmg.com 401 Merritt 7 PO Box 5116 Norwalk, CT 06856-5116 RE: Proposed Accounting Standards
More informationGASB 87 Leases. GASB 87 Scope and Effective Date
GASB 87 Leases December 12, 2017 GASB 87 Scope and Effective Date Effective date reporting period beginning after December 15, 2019 How does this improve accounting and financial reporting? Establishes
More informationLease & Finance Accountants Conference. September The Westin Charlotte Charlotte, NC
Lease & Finance Accountants Conference September 11-13 The Westin Charlotte Charlotte, NC H A N D O U T S EQUIPMENT LEASING AND FINANCE ASSOCIATION Transitioning to the ASC 842 Guidance Lessee Requirements
More informationIFRS Project Insights Leases
IFRS Project Insights Leases The IASB and FASB ( the Boards ) published a Discussion Paper (DP) setting out a proposed lessee accounting model in March 2009. The proposed accounting model has evolved since
More informationLeases. (a) the lease transfers ownership of the asset to the lessee by the end of the lease term.
Leases 1.1. Classification of leases A lease is classified as a finance lease if it transfers substantially all the risks and rewards incidental to ownership. A lease is classified as an operating lease
More informationSSAP 14 STATEMENT OF STANDARD ACCOUNTING PRACTICE 14 LEASES
SSAP 14 STATEMENT OF STANDARD ACCOUNTING PRACTICE 14 LEASES (Issued October 1987; revised February 2000) The standards, which have been set in bold italic type, should be read in the context of the background
More informationPreview of the New Exposure Draft of the Lease Accounting Project Key elements and commentary
Preview of the New Exposure Draft of the Lease Accounting Project Key elements and commentary Prepared by Bill Bosco, Leasing 101 www.leasing-101.com The Financial Accounting Standards Board (FASB) and
More informationASC 842 (Leases)
ASC 842 (Leases) On February 25, 2016 the Financial Accounting Standards Board of the United States (FASB) issued substantial new guidance on the treatment of leases for both lessees and lessors. The FASB
More informationIn December 2003 the Board issued a revised IAS 40 as part of its initial agenda of technical projects.
IAS 40 Investment Property In April 2001 the International Accounting Standards Board (the Board) adopted IAS 40 Investment Property, which had originally been issued by the International Accounting Standards
More informationGrant Thornton October Leases. Navigating the guidance in ASC 842
Grant Thornton October 2018 Leases Navigating the guidance in ASC 842 This publication was created for general information purposes, and does not constitute professional advice on facts and circumstances
More informationApplying IFRS. A closer look at the new leases standard. August 2016
Applying IFRS A closer look at the new leases standard August 2016 Contents Overview 3 1. Scope and scope exceptions 5 1.1 General 5 1.2 Determining whether an arrangement contains a lease 6 1.3 Identifying
More informationInternational Accounting Standard 17 Leases. Objective. Scope. Definitions IAS 17
International Accounting Standard 17 Leases Objective 1 The objective of this Standard is to prescribe, for lessees and lessors, the appropriate accounting policies and disclosure to apply in relation
More informationFinancial reporting developments. A comprehensive guide. Lease accounting. Accounting Standards Codification 840, Leases. Revised December 2016
Financial reporting developments A comprehensive guide Lease accounting Accounting Standards Codification 840, Leases Revised December 2016 To our clients and other friends We are pleased to provide you
More informationAccounting and Auditing Update. Staci L. Brogan, CPA, Shareholder Patricia R. Giudici, CPA, Senior Manager Schneider Downs & Co. Inc.
Accounting and Auditing Update Staci L. Brogan, CPA, Shareholder Patricia R. Giudici, CPA, Senior Manager Schneider Downs & Co. Inc. Agenda Overview of the standard setting agenda Revenue recognition Lease
More informationTechnical Corrections and Improvements to Recently Issued Standards
Two Proposed Accounting Standards Updates Issued: September 27, 2017 Comments Due: November 13, 2017 Technical Corrections and Improvements to Recently Issued Standards I. Accounting Standards Update No.
More informationTopic 842- Leases Making The Transition
Topic 842- Leases Making The Transition K-deep Dhaliwal, Partner, Moss Adams LLP Adam Hite, Senior Manager, Moss Adams LLP The material appearing in this presentation is for informational purposes only
More informationASC 842: Leases. Presented by: Maxwell Locke & Ritter LLP June 15, Maxwell Locke & Ritter
ASC 842: Leases Presented by: Maxwell Locke & Ritter LLP June 15, 2018 The New Lease Standard FASB ASC 842, Leases Supersedes FASB ASC 840, Leases Effective for calendar year-end public companies in 2019;
More informationClay L. Pilgrim, CPA, CFE, CFF. What Financial Statement Preparers Need to Know About GASB s New Lease Accounting Proposal.
Clay L. Pilgrim, CPA, CFE, CFF What Financial Statement Preparers Need to Know About GASB s New Lease Accounting Proposal Today s Presenter Clay Pilgrim, CPA, CFE, CFF is a partner with Rushton & Company,
More informationWhile we generally support the FASB s conclusions on the leases project, we have comments on the following topics:
July 2, 2015 Ms. Susan M. Cosper, Technical Director Financial Accounting Standards Board 401 Merritt 7 P.O. Box 5116 Norwalk, CT 06856-5116 Subject: Lease Accounting Project Dear Sue: The Financial Reporting
More informationLease Accounting - New Changes in US, International and Government Accounting Standards
Lease Accounting - New Changes in US, International and Government Accounting Standards Roberta J. Cable, Ph.D., CMA Patricia Healy, CPA, CMA Lubin School of Business Administration, Pace University, USA
More informationLeases: A Comprehensive Update on the Joint Project
The Dbriefs Financial Reporting series presents: Leases: A Comprehensive Update on the Joint Project Bob Uhl, Deloitte & Touche LLP Trevor Farber, Deloitte & Touche LLP James Barker, Deloitte & Touche
More informationClick to edit Master title style REVENUE RECOGNITION Understanding the New Revenue Recognition Standard ASC 606
Click to edit Master title style REVENUE RECOGNITION Understanding the New Revenue Recognition Standard ASC 606 9/7/2017 0 Agenda Overview of ASC 606 Review of the five-step process Accounting for contract
More informationBrad Bonde, CPA Senior Manager, HC Services/Audit & Advisory
Brad Bonde, CPA Senior Manager, HC Services/Audit & Advisory Overview Background Improving Lease Accounting Scope Accounting Models Disclosures Effective Dates 2 Background Source - FASB 3 QUIZ What amount
More informationProposed New Accounting Standards For Leases
Relationships backed by performance. Proposed New Accounting Standards For Leases Doug Richardson Live Seminar 9:00am 10:30am June 21 2012 Overview and Background Leases serve a vital role in many entities
More informationMONITORDAILY SPECIAL REPORT. Lease Accounting Project Update as of May 25, 2011 Prepared by Bill Bosco, Leasing 101
MONITORDAILY SPECIAL REPORT Lease Accounting Project Update as of May 25, 2011 Prepared by Bill Bosco, Leasing 101 The high volume of comment letters (780+) and numerous outreach meetings had common criticisms
More informationSri Lanka Accounting Standard-LKAS 17. Leases
Sri Lanka Accounting Standard-LKAS 17 Leases -516- Sri Lanka Accounting Standard-LKAS 17 Leases Sri Lanka Accounting Standard LKAS 17 Leases is set out in paragraphs 1 69. All the paragraphs have equal
More informationCaptive and Vendor Leasing
Captive and Vendor Leasing Equipment Leasing Association Lease Accountants Conference September 18, 2006 Deborah Brady James S. Brzoska Alan L. Moose Key Equipment Finance IBM Global Financing John Deere
More informationFASB Emerging Issues Task Force
EITF Issue No. 09-4 FASB Emerging Issues Task Force Issue No. 09-4 Title: Seller Accounting for Contingent Consideration Document: Issue Summary No. 1, Supplement No. 1 Date prepared: August 21, 2009 FASB
More informationThe new accounting standard for leases. 27 March 2017
The new accounting standard for leases 27 March 2017 Disclaimer Ernst & Young refers to the global organization of member firms of Ernst & Young Global Limited, each of which is a separate legal entity.
More informationSection 12 Accounting for Leases Accounting by the Lessor and Lessee
Section 12 Accounting for Leases Accounting by the Lessor and Lessee 15-1 A lease is an agreement in which the lessor conveys the right to use property, plant, or equipment, usually for a stated period
More informationDefining Issues February 2013, No. 13-8
Issues & Trends Defining Issues February 2013, No. 13-8 Revenue Recognition: Boards Decide Scope and Industry-Specific Issues At their January 2013 meeting, the FASB and IASB (the Boards) made tentative
More informationExposure Draft. Indian Accounting Standard (Ind AS) 116 Leases. (Last date for Comments: August 31, 2017)
ED/Ind AS/2017/06 Exposure Draft Indian Accounting Standard (Ind AS) 116 Leases (Last date for Comments: August 31, 2017) Issued by Accounting Standards Board The Institute of Chartered Accountants of
More informationFinancial reporting developments. A comprehensive guide. Lease accounting. Accounting Standards Codification 842, Leases.
Financial reporting developments A comprehensive guide Lease accounting Accounting Standards Codification 842, Leases January 2019 To our clients and other friends Accounting Standard Codification (ASC)
More informationFASB/IASB Update Part II
American Accounting Association FASB/IASB Update Part II Tom Linsmeier FASB Member August 3, 2014 The views expressed in this presentation are those of the presenters. Official positions of the FASB/IASB
More informationWhy IFRS 16 matters to the shipping industry
www.pwc.no Why IFRS 16 matters to the shipping industry October 2017 Executive summary New lease standard to be effective 1 January 2019. Early implementation permitted together with IFRS 15 (effective
More informationThere are two main reasons why leases may need to be reclassified under the Code.
4.2 Leases and Lease Type Arrangements A - Reclassification of Leases The requirements of the Code in respect of lease classification are different to those of the SORP. Authorities will therefore need
More informationNew Developments Summary
July 10, 2018 NDS 2018-07 New Developments Summary Leases in transition New leasing standard provides detailed transition guidance Summary For most entities, one of the more complex aspects of implementing
More informationIntermediate Accounting
Intermediate Accounting Presenters: Amy Nelson, SVP, De Lage Landen Financial Services Theo Schuldt, Assistant Controller, GATX Corporation Agenda Lease Classification Issues Items included/excluded in
More informationNew Clarity & Relief Proposed for Leases
Last year, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2016-02, Leases (Topic 842), which requires lessees to recognize all leases with terms greater than 12
More informationFASB Emerging Issues Task Force. Issue No Title: Accounting by Lessees for Maintenance Deposits under Lease Arrangements
EITF Issue No. 08-3 FASB Emerging Issues Task Force Issue No. 08-3 Title: Accounting by Lessees for Maintenance Deposits under Lease Arrangements Document: Issue Summary No. 1, Supplement No. 1 Date prepared:
More informationFinancial reporting developments. A comprehensive guide. Lease accounting. Accounting Standards Codification 842, Leases.
Financial reporting developments A comprehensive guide Lease accounting Accounting Standards Codification 842, Leases January 2018 To our clients and other friends Accounting Standard Codification (ASC)
More informationThe New Lease Accounting Standard. Hunter Mink, CPA, CCIFP Brian Rosenberg, CPA, MBA
The New Lease Accounting Standard Hunter Mink, CPA, CCIFP Brian Rosenberg, CPA, MBA 1 Agenda Introduction Lease Identification and Classification Lessee Accounting Other Considerations Disclosures Impact
More informationDefining Issues May 2013, No
Defining Issues May 2013, No. 13-24 FASB and IASB Issue Revised Exposure Drafts on Lease Accounting The FASB and IASB (the Boards) recently issued revised joint exposure drafts (EDs) on proposed changes
More information