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Accounting for Leases: Guidelines for the New Standard ASU 2016-02 (Course Id 1476)

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Author : Jae K. Shim, Ph.D., CPA
Course Length : Pages: 83 ||| 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 :

Historically, lease accounting has been straightforward: a capital lease vs. an operating lease. An operating lease is treated as an off-balance sheet operating expense.  The FASB issued ASU 2016-02, Leases (ASC 842) in response to the growing need for transparency and comparability among organizations. The basic concept of ASC 842 is that leases of all types convey the right to direct the use and obtain substantially all the economic benefit of an identified asset, creating an asset and liability for lessees. Thus, the most significant change requires lessees to recognize the rights and obligations resulting from all leases (greater than 12 months) as assets and liabilities on their balance sheets. Although the lessor accounting is largely unchanged from ASC 840, there are some important changes and more disclosure requirements. For example, certain principles of the lessor model are updated to align with changes to the lessee model and the revenue recognition standard (ASC 606). As a result, ASC 842 brings additional scrutiny from enterprise leaders, auditors, and regulators.

This course is designed to help you navigate the complexities of this standard. It explains financial accounting and reporting requirements for lessees and lessors with specific examples to illustrate the application. It also includes public business entities’ reporting responsibilities and explains how ASC 842 affects a company’s financial results. Finally, it shares insights that help companies develop a reasonable leasing policy threshold, maintain effective internal control over leases, and prepare for audits.

Usage Rank : 0
Release : 2022
Version : 1.0
Prerequisites : General Accounting.
Experience Level : Overview
Additional Contents : Complete, no additional material needed.
Additional Links :
Advance Preparation : None.
Delivery Method : QAS Self Study
Intended Participants : Anyone needing Continuing Professional Education (CPE).
Revision Date : 05-Feb-2023
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 :

Course Learning Objectives

Upon completion of this course, you will be able to:
    1. Recognize the improvement over the lease accounting through the release of ASC 2016-02
    2. Cite the key changes in the leasing practice
    3. Identify the applicability of the lease standard
    4. Identify key concepts in lease accounting
    5. Recognize the difference between U.S. GAAP and IFRS affecting the lease accounting practice
    6. Identify the accounting rules for initial direct costs
    7. Recognize the methods of accounting for different types of leases by lessees and lessors
    8. Identify risks and controls over leasing activities
Course Contents :

Part I. Fundamentals of Lease Accounting

Overview of Lease Standard



Major Changes


Summary of Key Amendments

Transition Principles for Private Entities

Effective Date

Transition Elections

Transition Approach

Other Matters

Comparison of U.S. GAAP and IFRS Standard


Significant Differences

Section 1 Review Questions

Core Principles of Lease Accounting

Definition of a Lease

Lease Classification

Lease Accounting

Accounting Policy Elections


Rent Concessions Guidance Due to COVID-19 Pandemic

Section 2 Review Questions

Part II: The Application of the Lease Standard

General Rules

Identification of a Lease

Separation of Lease and Nonlease Components

Lease Commencement Date

Initial Recognition and Measurement

Subsequent Measurement

Section 3 Review Questions

Lessee Model

Measurement of the Consideration

Lease Classification

Initial Recognition and Measurement

Subsequent Measurement

Lease Modifications



Section 4 Review Questions

Lessor Model

Measurement of the Consideration in the Contract

Lease Classification

Initial Recognition and Measurement

Subsequent Measurement

Lease Modifications



Section 5 Review Questions

Sale and Leaseback Transactions

General Rules

Lessee Involvement in the Construction or Design


Initial Measurement

Section 6 Review Questions

Part III. Other Lease Matters

Practical Considerations for Lease Accounting

Recognition (Capitalization) Thresholds

Assumptions and Judgments

Lease Administration System

Financial Performance

Real Estate Industry

Lease Processes and Controls

SOX Compliance

Entity-Level Controls

Risks and Controls over Leasing Activities

Audit Readiness

Section 7 Review Question


CPE Accounting Course: https://www.cpethink.com/accounting-cpa-courses
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