Perspectives

Reasonably certain of your lease disclosures? Observations on first-quarter filings

This issue summarizes the presentation and disclosure trends we have observed in our review of lessee and lessor financial statements, as well as select lessee and lessor disclosures, provided in the public filings of a sample of companies that adopted the FASB’s new leasing standard (ASC 842) as of the first quarter of 2019.

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Introduction

Calendar-year-end public business entities adopted the FASB’s new leasing standard (ASC 842) in the first quarter of 2019. Most companies with lessee activity have disclosed that the new requirements are resulting in a material impact on their balance sheets but not on their other financial statements. Further, many companies with lessor activity have disclosed that the new requirements do not materially affect their accounting for lessor contracts. That said, all entities were affected by the standard’s new and modified quantitative and qualitative disclosure guidance, which significantly increases the amount of information disclosed about leasing activities and related transactions when those requirements are material to the company’s financial statements. However, we observed that the amount and level of detail disclosed by entities varied and that entities used different formats to present the information.

This Heads Up summarizes the presentation and disclosure trends we have observed in our review of lessee and lessor financial statements, and select lessee and lessor disclosures, provided in the public filings of a sample of companies that adopted the standard as of the first quarter of 2019. For a comprehensive discussion of the new leasing standard, including all presentation and disclosure requirements, see Deloitte’s A Roadmap to Applying the New Leasing Standard.

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Volume 26, Issue 14 | July 1, 2019

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Heads Up newsletter is a periodic newsletter that analyzes important accounting developments, such as new FASB and IASB pronouncements or exposure drafts.

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