FASB ASC 842 , Leases
Lease Amended ? |
Remeasurement Type |
Approach |
Payments |
Consideration / |
Discount |
Lease |
|
|
|
|
Allocation |
Rate |
Classification |
No
Yes
Change in lease term Yes Yes Yes Yes
Change in assessment |
|
|
|
|
of purchase option |
Yes |
Yes |
Yes |
Yes |
being exercised |
|
|
|
|
Change in probable |
Remeasurement Accounting |
Yes |
Yes |
No |
No |
RVG |
|
|
|
|
|
Variable Payments |
Yes |
Yes |
No |
No |
become fixed |
|
|
|
|
Lease Amendment- |
Modification |
Yes |
Yes |
Yes |
Yes |
|
Accounting |
|
|
|
|
Modification that is not a separate contract
Lessee vs . Lessor Accounting The accounting treatment for lease modifications differs between lessees and lessors . Lessors must also consider whether the modification results in a separate lease or a continuation of the existing lease .
Operating Leases : For lessors with operating leases , if the modification is not accounted for as a separate lease , the lessor continues to recognize the lease income under the modified terms . The lessor will reassess the lease classification if the modification results in a substantial change to the lease . Finance Leases : For lessors with finance leases , modifications that do not create a separate lease are accounted for by adjusting the net investment in the lease and recognizing any impact in profit or loss . The lessor must reassess the lease classification under the modified terms to determine if it remains a finance lease or should be reclassified . ASC 842 requires companies to disclose the nature and financial impact of lease modifications in their financial statements .
When reassessing modifications , keep in mind :
• Lease modifications need to be identified and assessed promptly ( e . g . on a triggering date ).
• Discount rates need to be reassessed given current interest rate environment , credit profiles , collateral requirements and updated lease terms .
• Remeasuring and reallocating lease liabilities requires professional judgment , especially when there are multiple lease components or variable lease payments . Evaluating lease modifications under FASB ASC 842 requires diligent assessment and evaluation of new lease accounting terms . Look to FASB ASC 842- 10-55-159 through 254 for guidance on how to account for lease modifications .
Gary Krausz , CPA / CFF is a partner at Gursey | Schneider LLP . You can reach him at garyk @ gursey . com .
Statement of Ownership , Management and Circulation
1 . Publication Title : California CPA magazine 2 . Publication Number : 020-222 3 . Filing Date : Oct . 1 , 2024 4 . Issue Frequency : Monthly except for February and April 5 . Number of Issues Published Annually : Ten 6 . Annual Subscription Price : $ 75
7 . Complete Mailing Address of Known Office of Publication : CalCPA ; 500 Capitol Mall , Suite 2350 ; Sacramento , CA 95814 .
8 . Complete Mailing Address of Headquarters or General Business Office of Publisher : CalCPA ; 500 Capitol Mall , Suite 2350 ; Sacramento , CA 95814 .
9 . Full Names and Complete Mailing Addresses of Publisher : Denise LeDuc Froemming ; CalCPA ; 500 Capitol Mall , Suite 2350 ; Sacramento , CA 95814 .
Editor : Aldo Maragoni .
10 . Owner : CalCPA ; 500 Capitol Mall , Suite 2350 ; Sacramento , CA 95814 .
11 . Known Bondholders , Mortgagees , and Other Security Holders Owning or Holding 1 Percent or More of Total Amount of Bonds , Mortgages or Other Securities : None
12 . Tax Status : Has Not Changed During Preceding 12 Months 13 . Publication Title : California CPA magazine 14 . Issue Date for Circulation Data Below : 10 / 1 / 2023 – 09 / 30 / 2024 15 . Extent and Nature of Circulation :
Avg . No |
No . Copies of |
Copies Each |
Single Issue |
Issue During |
Published |
Preceding |
Nearest |
12 months |
to Filing Date |
a . |
Total Number of Copies ( net Press run ) |
35,227 |
32,648 |
b . |
Paid and / or Requested Circulation
1 ) Paid / Requested Outside County Mail Subscriptions Stated in Form 3541
|
34,722 |
31,941 |
|
2 ) Paid In-County Subscriptions Stated on Form 3541 |
0 |
0 |
|
3 ) Sales through Dealers and Carriers , Street Vendors , Counter Sales , and Other Non-USPS Paid Distribution |
0 |
0 |
|
4 ) Other Classes Mailed Through USPS |
0 |
0 |
c . |
Total Paid and / or Requested Circulation ( sum of 15b . ( 1 ), ( 2 ), ( 3 ) and ( 4 ) |
34,722 |
31,941 |
d . |
Free Distribution by mail 1 ) Outside-County as Stated on Form 3541 |
117 |
121 |
|
2 ) In-County as Stated on Form 3541 |
0 |
0 |
|
3 ) Other Classes Mailed Through USPS |
0 |
0 |
|
4 ) Free Distribution Outside Mail 559 |
0 |
0 |
e . |
Total Free Distribution ( Sum of 15d . and 15e .) |
117 |
121 |
f . |
Total Distribution ( Sum of 15c . and 15e .) |
34,839 |
32,062 |
g . |
Copies Not Distributed |
388 |
586 |
h . |
Total ( Sum of 15g . and h .) |
35,227 |
32,648 |
i . |
Percent Paid and / or Requested Circulation ( 15c . divided by 15g . times 100 ) |
99.6 % |
99.6 % |
16 . Publication of Statement of Ownership : Publication Required |
17 . |
Signature and Title of Editor , Publisher , Business Manager , or Owner : |
Aldo Maragoni , Editor ; Date : October 1 , 2024 |