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| Author : | Jae K. Shim, Ph.D., CPA |
| Course Length : | Pages: 74 ||| Review Questions: 30 ||| Final Exam Questions: 35 |
| CPE Credits : | 7.0 |
| IRS Credits : | 0 |
| Price : | $62.95 |
| Passing Score : | 70% |
| Course Type: | NASBA QAS - Text - Technical - NASBA Registry |
| Primary Subject-Field Of Study: | Accounting - Accounting for Course Id 1476 |
| Description : | In February 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2016-02, Leases (ASC 842) providing new requirements of financial accounting and reporting for lessees and lessors. This new standard represents the first comprehensive overhaul of lease accounting since FAS 13 was issued in 1976. The new guidance will affect entities across all industries because most companies enter into contracts that contain leases to support their business operations. Lessees will likely see the most significant changes as they are required to recognize substantially all leases on their balance sheets with a corresponding right-of-use asset. While lessor accounting remains similar to previous guidance in most respects, there are some important changes. For example, certain principles of the lessor model are updated to align with changes to the lessee model and the new revenue recognition standard (ASC 606). The new lease guidance introduces significant changes to lease accounting, such as lessees’ recognition of lease assets and liabilities, an exception for short-term leases, elimination of leveraged leases, new criteria for reporting sale-leaseback transactions, increased use of judgment, and expansive disclosures. Moreover, entities are required to use a modified retrospective approach to reflect the effect of the new guidance in the earliest year presented in the financial statements. As a result, implementation of ASC 842 could have a significant impact on companies’ financial operations - from general accounting and financial reporting, treasury, IT systems, tax, budgeting to forecasting functions. The change in lease standard presents both a challenge and an opportunity to enhance internal control and optimize the lease accounting and administration processes. To minimize disruptive missteps and costly noncompliance, entities need to take a timely and thorough approach. This course is designed to help you navigate the complexities of this standard, identify the implications of it, and prepare for transition and implementation. It provides a working knowledge of the fundamentals of lease standards that can be applied, regardless of the company size, in the real world. |
| Usage Rank : | 0 |
| Release : | 2020 |
| Version : | 1.0 |
| Prerequisites : | General Accounting. |
| Experience Level : | Overview |
| Additional Contents : | Complete, no additional material needed. |
| Additional Links : |
Practical Illustrations of the New Leasing Standard for Lessees
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| Advance Preparation : | None. |
| Delivery Method : | QAS Self Study |
| Intended Participants : | Anyone needing Continuing Professional Education (CPE). |
| Revision Date : | 29-Dec-2020 |
| NASBA Course Declaration : | Participants must complete the final examination within one year of purchase and with a minimum passing grade of 70% or better to receive CPE credit unless otherwise noted on the Course History page (i.e. California Ethics must score 90% or better). After logging in click on the Course History links on your My Courses page for the Begin date and Expire date for the Final Exam. |
| Approved Audience : | NASBA QAS - Text - Technical - NASBA Registry - 1476 |
| Keywords : | Accounting, Accounting, Leases, Guidelines, New, Standard, ASU, 2016-02, cpe, cpa, online course |
| Learning Objectives : |
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| Course Contents : | Table of Contents Chapter 1 - Accounting for Leases: Guidelines for the New Standard ASU 2016-02 Course Learning Objectives Part I. The Fundamentals of the Lease Accounting Rising to the Challenge The Reason for the New Guidance The Significant Improvements for Lease Accounting Key Changes in the Lease Requirements Subsequent Amendments Applicability Effective Date Leases During COVID-19 Pandemic Exhibit A: FASB Staff Q&A Document on Accounting for Leases During COVID-19 Pandemic Section 1 Review Questions Transition Guidance Practical Expedients Leases Acquired in a Business Combinations Transition Requirements General Rules Lessee Transition Operating Leases For Former Operating Leases Classified as Operating Leases For Former Operating Leases Classified as Finance Leases Capital Leases For Former Capital Leases Classified as Finance Leases For Former Capital Leases Classified as Operating Leases Build-to-Suit Lease Arrangements Lessor Transition Operating Leases Finance Leases Leveraged Leases Sale and Leaseback Retrospective Reporting Compliance Section 2 Review Questions The Core Principles of Lease Accounting Key Concepts Definition of a Lease Lease Classification Lessee Accounting Lessor Accounting U.S. GAAP vs. IFRS Section 3 Review Questions Part II. The Impact of the New Lease Standard Required Organizational Changes Overall Challenges Strategies Implementation Strategies Enhancing Lease Administration Systems Improving the Business Processes Increased Estimates and Judgments The Risk of Material Misstatement Enhancing the Quality of Accounting Estimates Implications to Debt Covenants and Financial Statements Debt Covenants Financial Metrics Implications to Real Estate Industry Overview Lessee (Tenants) Accounting Lessor (Landlords) Accounting Other Considerations SEC Registrants’ Reporting Responsibilities Sarbanes-Oxley Act Assessment SOX Section 404 SOX Section 302 Risk and Control Considerations General Disclosure Rules Exhibit B: Amazon 2019 Annual Report Section 4 Review Question Part III: The Application of the Lease Standard General Rules Identification of a Lease Identified Asset Substantive Substitution Rights Portions of Assets Right to Control the Use of the Identified Asset Right to Obtain the Economic Benefits from the Use of the Identified Asset Right to Direct the Use of the Identified Asset Separation of Lease and Nonlease Components Contract Combinations Lease Commencement Date Initial Recognition and Measurement Lease Term and Purchase Options Lease Payments Initial Direct Costs Discount Rate for the Lease Subsequent Measurement Lease Modifications Disclosures Section 5 Review Questions Lessee Model Measurement of the Consideration in the Contract Determining the Consideration Allocating the Consideration Lease Classification Initial Recognition and Measurement Short-Term Leases Finance Leases Operating Leases Subsequent Measurement Remeasurement of the Lease Liability Finance Lease Operating Lease Leasehold Improvements Subleases Lease Termination Lease Modifications Presentation Balance Sheet Income Statement Statement of Cash Flows Disclosures Qualitative Disclosure Quantitative Disclosure Section 6 Review Questions Lessor Model Measurement of the Consideration in the Contract Determining the Consideration Allocating the Consideration Lease Classification Initial Recognition and Measurement Sales-Type Leases Direct Financing Leases Operating Leases Subsequent Measurement Sales-Type and Direct Financing Leases Impairment of the Net Investment in the Lease Sale of the Lease Receivable Underlying Asset Lease Termination Operating Leases Subleases Lease Modifications Presentation Sales-Type and Direct Financing Leases Balance Sheet Income Statement Statement of Cash Flows Operating Leases Disclosures Qualitative Disclosure Additional Disclosure Sales-Type and Direct Financing Leases Operating Leases Section 7 Review Questions Sale and Leaseback Transactions General Rules Attributes of a Contract Indicators that Control of the Asset Has Transferred Lessee Involvement in the Construction or Design of the Underlying Asset Recognition Initial Measurement Section 8 Review Questions Glossary Table of Examples Transition Guidance Example 1: Lessee Transition - Existing Operating Lease Example 2: Lessee Transition - Existing Capital Lease Identification of a Lease Example 3: Contracts Contains a Lease Separation of Components of a Contract Example 4-1: Payments for Taxes and Insurance Are Variable Example 4-2: Payments for Taxes and Insurance Are Fixed Example 4-3: Common Area Maintenance Lease Commencement Date Example 5: Determination of the Lease Commencement Date Lease Payments Example 6-1: Purchase Option Price Included in Lease Payments Example 6-2: Termination Penalties Included in the Lease Payments Initial Direct Costs Example 7: Determination of Initial Direct Costs Determination of Discount Rate for the Lease Example 8: Portfolio Approach to Establishing the Discount Rate for the Lease Lessee Accounting Model Example 9: Variable Lease Payments That Depend on an Index or a Rate Example 10: Lease Classification - Operating Lease Example 11: The Assessment of a Short-Term Lease Example 12: Finance Lease Initial Recognition Example 13: Initial and Subsequent Measurement Example 14-1: Modification Accounted for As a Separate Contract Example 14-2: Modification That Increases the Lease Term Example 15: Quantitative Disclosure Requirements Lessor Accounting Model Example 16: Measuring the Consideration in the Contract Example 17: Allocation of Consideration to Lease and Nonlease Components of a Contract Example 18: Lease Classification - Sales-Type Lease Example 19: Sales-Type Lease Recognition Example 20: Direct Financing Lease Recognition Example 21-1: Modification of an Operating Lease That Does Not Change Lease Classification Example 21-2: Modification of an Operating Lease That Changes Lease Classification Example 21-3: Modification of a Direct Financing Lease Sale and Leaseback Transactions Example 22: Lessee Obtains Control of Construction in Progress Example 23: Gain on Sale Example 24: Seller-Lessee Sells Assets < Fair Value |
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