Latest Lease Management & Lease Accounting Intelligence Articles
New ASC 842 lease accounting & lease management articles, newest first.
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Capital Lease: What the Old Term Means Under ASC 842
What a capital lease was under ASC 840, why ASC 842 calls it a finance lease, how the two compare line by line, and how a lessee records one today, with a five-year equipment lease worked through its first-year entries and current portion.
Is Prepaid Rent an Asset? Prepaid Rent Under ASC 842
Where rent paid in advance sits under ASC 842: a current prepaid asset on a short-term lease, or part of the right-of-use asset on a recognized lease. Includes the month-end adjusting entry and a side-by-side worked example with every input stated.
Is Rent a Liability, an Expense or an Asset Under ASC 842?
Sorts a tenant’s rent into expense, liability or asset under ASC 842: rent due and unpaid, future payments on a recognized lease, short-term and month-to-month rent, and rent paid ahead, with a classification table by ASC paragraph and one month of entries on a $10,000-a-month office lease.
Lease Amortization Schedule: How to Build and Read One Under ASC 842
How a lease amortization schedule is built and read under ASC 842: what each column holds, how payments in arrears and in advance change the period math, and one $48,000-a-year lease run as both an operating and a finance schedule.
Rent Commencement Date vs Lease Commencement Under ASC 842
What the rent commencement date in a lease means, why ASC 842 does not use it as the accounting start date, and what a four-month gap between the two dates does to the lease liability, right-of-use asset and straight-line cost.
Built-to-Suit Lease Accounting: The ASC 842 Control Test
How a tenant decides whether it controls a building or other asset under construction before lease commencement under ASC 842-40-55-5, what each of the five control indicators puts on its balance sheet, and when a build-to-suit ends in sale-leaseback accounting.
Lease Adjusted Leverage: How Leases Enter the Debt Ratio
What lease-adjusted leverage measures, whether ASC 842 treats operating lease liabilities as debt, where finance lease liabilities fit, and a worked calculation of debt to EBITDA and lease-adjusted debt to EBITDAR for one private company.
Lease Commission Amortization Under ASC 842
How a broker’s leasing commission is treated as an initial direct cost under ASC 842-10-30-9, which lease costs fall outside that definition, and how the commission is amortized by a lessee through the right-of-use asset and by a lessor under each lease classification, with five-year schedules for both sides.
What Is a Synthetic Lease Under ASC 842
What a synthetic lease is as a structuring term, which ASC 842 tests its purchase option, residual value guarantee and construction terms feed, and why the lessee may also need a Topic 810 consolidation analysis.
Occupancy Agreement vs Lease Under ASC 842
Whether an occupancy agreement, license, tenancy agreement or coworking membership is a lease under ASC 842, with a decision matrix that tests four space arrangements against the identified-asset, substitution, economic-benefits and direction-of-use paragraphs.
Capitalized Interest on Lease Liabilities
Whether interest on a lessee’s lease liability can be capitalized into an asset under construction under ASC 835-20, why finance lease interest qualifies and operating lease cost does not, and how to compute the capitalization rate and amount, with a worked plant-construction example.
Lessee vs Lessor Under ASC 842
Which party to a lease is the lessee and which is the lessor under the ASC 842-10-20 definitions, why the lessor need not own the asset, and a side-by-side table of what each records, with a three-year worked example.
What Is a Gross Lease? Meaning and ASC 842 Treatment
Explains what a gross lease is and how full gross, modified gross and industrial gross rent differ in the contract, then works one space through all three under ASC 842 to show the lease liability and year-one cost each produces.
Combining Lease Contracts Under ASC 842: The Three Criteria and What They Do on the Books
When separately signed contracts must be treated as one under ASC 842-10-25-19: a row-by-row decision table for same-week maintenance agreements, master leases, side letters and later amendments, plus a worked reallocation of $4,500 a month across a combined equipment lease and service contract.
Direct Financing Lease Accounting for Lessors
How a lessor tests, measures and books a direct financing lease under ASC 842-30, with a worked example of deferred selling profit and the second income rate it creates.
Lease Inception vs Commencement Date Under ASC 842
What happens on the lease inception date versus the commencement date under ASC 842, with a dated timeline for one office lease from signing through fit-out access, rent start and move-in, and the day-one liability and ROU asset when rent is prepaid at signing.
Sale Leaseback Gain Recognition Under ASC 842
When a sale-leaseback qualifies as a sale under ASC 842-40, how the seller-lessee measures and books the gain, how a price above or below fair value becomes additional financing or prepaid rent, and what the buyer-lessor records, with a three-case worked example.
Triple Net Lease Meaning: NNN Rent Under ASC 842
Defines a triple net (NNN) lease against gross, modified gross, single, double and absolute net leases, then shows how a lessee treats base rent, property taxes, insurance and CAM under ASC 842, with a worked liability figure.
Weighted Average Remaining Lease Term and Discount Rate
How a lessee calculates the two weighted averages in its ASC 842 lease footnote: the remaining lease term, weighted by each lease liability, and the discount rate, weighted by remaining lease payments. A four-lease worked table shows every input and result.
What Is a Lease Purchase? How a Lessee Accounts for a Lease-to-Own Deal Under ASC 842
How a lessee books a lease-to-own equipment deal under ASC 842: when title transfer or a $1,000 purchase option makes it a finance lease, why the option price sits in the lease liability, and why the ROU asset is amortized over eight years rather than five.
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