Other information disclosures required by ASC 842 include cash flow and supplemental non-cash information related to lease liabilities. For example, the $549,749.50 presented on the Complete Disclosure Report agrees to the total balance in the Amortization of ROU Assets – Finance Lease detail. The gif below demonstrates how additional details can be viewed for the Amortization of ROU Assets – Finance Leases. This allows users to perform the necessary reconciliations of the balances disclosed in the financials. business unit, or region results) could be reviewed, along with the data at the individual lease level. For example, summary information at any level of the entity’s organization (i.e. In addition to summary company level information, LeaseQuery software provides the ability to drill down within each disclosure calculation. These reports generate the required comparative financial information upon transition. However, if a company chooses to present comparative information, this is configured during the company’s set-up of LeaseQuery. In our experience, most companies will elect the practical expedient to not disclose comparative information within its financial statements and will instead adopt ASC 842 on the transition date. See below for the excerpt related to lease cost: The Complete Disclosure Report generated by LeaseQuery (in the gif above) can be exported into Excel and used as the basis for these quantitative disclosures. This is an excerpt of the portion related to lease cost: The net of these transactions results in annual consolidated lease cost.ĪSC 842 includes an example to illustrate the full quantitative disclosure requirements. And, if a company has entered into any sub-lease arrangements, the income on these arrangements should be disclosed. To the extent that a company’s lease agreements include variable lease expense, the annual cost should be disclosed. ASC 842 requires separate disclosures of operating and finance lease expense, and also disclosure of lease expense for companies that have elected the practical expedient to treat short-term leases similar to ASC 840 accounting requirements. This is the sum of the fixed and variable considerations within a lease contract. Lease costs are the total costs attributable to entering into a lease agreement – otherwise known as the expense. The quantitative disclosures required under ASC 842 can be considered in four buckets – Lease Costs, Other Information, Weighted Averages, and Maturity Analysis. Looking at quantitative disclosures in four “buckets” The full report can be exported to Excel, allowing users to quickly copy/paste the quantitative data in a company’s footnotes. This gif demonstrates how to easily run the complete listing of disclosures required under ASC 842 in LeaseQuery. LeaseQuery has established its reporting in a similar tabular format. However, the examples within ASC 842 present the information in a tabular format. The guidance does not require a specific format of these disclosures. ![]() This allows a company to quickly aggregate the data to complete its lease footnote in accordance with ASC 842. ![]() LeaseQuery’s reporting studio includes an ASC 842 Complete Disclosures Report that can be generated for the entire organization. Additionally, these calculations need to be updated on an ongoing basis for any modifications, lease additions, or terminations during each subsequent period. After compiling the necessary data and performing the required calculations, the company then has to validate the accuracy of the spreadsheet calculations for its internal control requirements and its auditors. Without assistance from a software provider, accumulating the supporting data for the quantitative lease disclosures can be a time consuming task. Why software makes generating disclosures more accurate and efficient Information about the operating and finance lease amounts recognized in the financial statementsįollowing is a discussion on the expanded quantitative disclosures.A description of significant judgments made in applying ASC 842 to the lease population.The disclosure requirements for lessees include both qualitative and quantitative elements specifically: In this article, we’ll provide an overview of the new disclosures and also discuss the necessary supporting data that will need to be accumulated for your company’s annual disclosures. A focus on quantitative disclosures for lessees In conjunction with the change of accounting treatment, the guidance also includes expanded disclosure requirements for all leases. ASC 842, Leases, is a comprehensive change from previous guidance that requires both finance and operating leases to be recognized on the balance sheet, where only finance (historically called capital leases) were recorded previously.
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