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Thomson Offers Lease Accounting Guidance

Anne-Lise Dorry, Thomson ReutersThomson Reuters has released a special report, An Overview of the New Accounting Model for Leases. The report addresses FASB’s guidance on leases, which was issued in February 2016: FASB’s Accounting Standards Update (ASU) No. 2016-02, Leases (Topic 842).

The new standard requires lessees to record lease assets and liabilities on balance sheets and make disclosures about these arrangements. Thomson notes lessors face changes, such as new significant disclosure requirements and changes  guidance for sale-leaseback transactions.

"This standard is not easy to implement and the amount of work involved is often underestimated. From identifying all leases that may hide in contracts to the amount of judgment required to determine the new lease liability, there are real challenges involved,” Thomson’s Anne-Lise Dorry, senior director for corporate finance products, said in a prepared statement.

The report starts with headline issues, which affect both parties in a contract, such as the new definition of a lease and the revised lease classification criteria. It alsos covers lease accounting by lessees and lessors,, followed by the requirements for transitioning to and adopting Topic 842. 

Also provided is information on practical expedients and types of relief to available to lessees and lessors. The report, which can be downloaded for free, also outlines next steps and practical considerations for implementing the standard. 

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