Implementing the New Lease Standard - ASU 2016-02 and Other Amendments (8 hour version) (Course Id 2107)

Accounting - Accounting for Course Id 2107

The purpose of this course is to review the changes made to lease accounting by ASU 2016-02, Leases, (as further amended by ASU 2018-01, Land Easement- Practical Expedient for Transition to Topic 842, and numerous other amendments), and to establish the principles that lessees and lessors shall apply to report useful information to users of financial statements about the amount, timing, and uncertainty of cash flows arising from a lease.  Topics include a review of the new rules for lessees and lessors, the types of leases, how to account for the balance sheet, income statement and cash flows statement impacts of different types of leases, the implementation requirements, and more. 

NASBA QAS - Text - Technical - NASBA Registry - 2107

Course Learning Objectives

• Recognize a key change made to GAAP by the new lease standard
• Identify a type of lease that exists for a lessee under ASU 2016-02
• Recall a type of lease for which the ASU 2016-02 rules do not apply
• Recognize some of the criteria that determine whether a contract is or is not a lease
• Identify some of the types of economic benefits a lessee can obtain from a leased asset
• Recognize a right that ASU 2016-02 states does not prevent a lessee from having the right to direct use of an identified asset
• Identify a threshold for a lease term to be considered a major part of an asset’s remaining economic life
• Recognize who an entity might not want to use the risk-free rate to compute the present value of lease payments
• Identify how a lessee should account for initial direct costs
• Recognize items that are and are not components of a lease term
• Recall the method a lessee should use to record interest expense on a lease obligation
• Identify types of leases for a lessor
• Recognize the rate that a lessor should use in performing the 90% test for a direct financing lease
• Recall how a lessor should initially account for initial direct costs for a lease in certain instances
• Identify how a lessor should account for lease payments received on the income statement for an operating lease
• Recall how a lessor should classify certain cash receipts on the statement of cash flows
• Recognize how certain existing leases are accounted for on the implementation date of ASU 2016-02
• Identify how deferred income taxes will be treated for lessees under ASU 2016-02
• Recall the potential impact that the new lease standard might have on a lessee’s EBITDA and debt-equity ratios, and
• Recall the IRS rules as when an entity should and should not capitalize a lease for tax purposes.

Chapter 1 - Implementing the New Lease Standard - ASU 2016-02 and Other Amendments

I.   Background

II. Basic Concepts of ASU 2016-02

A. General Rules

Review Questions

III. Introduction

IV. Definitions used in ASU 2016-02

V. Scope and Scope Exceptions

VI. Identifying a Lease

Review Questions

VII. Lessee Rules

A. Lease Classification - Lessee

B. Initial Measurement of Lease- Lessee

C. Lease Payments - Lessee

D. Lease Term and Purchase Options- Lessee

E. Short-Term Leases- Lessee

F. Subsequent Measurement and Accounting for Leases- Lessee

G. Other Recognition and Measurement Issues- Lessees

H. Lease Modifications - Lessee

I. Subsequent Reassessment of Lease Elements- Lessee

J. Financial Statement Presentation Matters- Lessee

K. Disclosures by Lessees

Review Questions

VIII. Lessor Rules

A. Lease Classification

B. Amendments made to Lessor Rules since ASU 2016-02

C. Accounting for Sales-Type Lease- Lessor

D. Accounting for a Direct Financing Lease

E. Accounting for Operating Leases- Lessor

F. Disclosure- Lessor Leases

Review Questions

IX. Transition and Effective Date Information

A. General- Existing Leases

B. Transition to New Standard

X. Leases: Sale and Leaseback Transactions

XI. Leases: Leveraged Lease Arrangements

Review Questions

XII. Impact of Changes to Lease Accounting

XIII. Impact of Lease Changes on Nonpublic Entities

XIV. Other Considerations- Dealing with Financial Covenants

XV. Avoiding the New Lease Standard

Review Questions

Case Study for Implementation of ASU 2016-02

Glossary