Lease accounting

The FASB’s new lease accounting standard, ASU 2016-02, Leases (Topic 842), was issued on February 25, 2016. The new leasing standard presents dramatic changes to the balance sheets of lesseesLessor accounting is updated to align with certain changes in the lessee model and the new revenue recognition standard.

Our lease accounting page is your resource for implementing the new leasing guidance. Here you will find helpful information and insights on the new lease accounting rules including executive level insights through our In the loop series, and a deeper dive into the leasing standard’s overall requirements with our In depth publication. Now available: a comprehensive accounting and reporting guide on lease accounting to help you with your company’s implementation. Coming soon: industry focused In depth supplements. Visit pwc.com/us/leasing for details on how PwC can assist with your approach to the new standard.

  • A lessee will recognize on its balance sheet the present value of lease payments as a lease liability and a right-of-use asset (based on the lease liability with certain adjustments). A lessee will classify a lease as either operating or finance based on criteria that are largely similar to those applied today, but without explicit bright lines.

  • Lessors will continue to classify leases as operating, direct financing, or sales-type. Leveraged lease accounting is eliminated, although grandfathered for existing arrangements.

  • The new guidance provides a new sale-leaseback model applicable to both lessees and lessors. If the transaction fails sale treatment, the buyer and seller will reflect it as a financing.

  • Extensive quantitative and qualitative disclosures are required to provide greater insight into revenue and expense recognized and expected to be recognized from existing contracts.

The standard is effective for US GAAP public reporting entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. For private companies, the standard is effective for fiscal years beginning after December 15, 2019 and interim periods beginning the following year. Early adoption is permitted. Transition requires application of the new rules at the beginning of the earliest comparative period presented.


Listen to our podcast for an overview of the new leasing model

Need to get up to speed on the new leasing standard? This podcast will take you from zero to sixty on the new models for lessee and lessor, and how they can impact you.

In brief: Lease accounting: The long-awaited FASB standard has arrived

02/25/16

The FASB issued its new lease accounting standard. There are elements of the standard that could impact almost all entities to some extent, although lessees will likely see the most significant changes. Read our In brief article to learn more about the changes to lease accounting.

Lessor accounting under the new leasing standard

07/19/16

Is leasing your business? The new leasing standard makes changes to the accounting that will affect the leasing landscape. Watch now to learn more.

Energy leasing: The impact of the new leasing standard on energy companies - Webcast replay

07/13/16

During this recorded webcast, we discuss the impact of the new leasing guidance beyond financial reporting and address some of the actions that companies can undertake to prepare for the changes in a thoughtful way.

Lessee accounting under the new leasing standard

07/13/16

Need to get your head around the new leasing standard? Watch this video for leasing 101, from the Lessee’s point of view.

Straight talk on leasing

07/06/16

Data challenges. Operational issues. New demands on systems. The impacts of the new lease accounting standard extend far beyond accounting. In this collection of video clips, PwC helps you sort through the top leasing issues and offers practical guidance on your most pressing leasing transformation challenges.

2016 lease accounting survey

06/30/16

PwC and CBRE surveyed executives from organizations’ accounting, finance and real estate functions about actions they are considering to prepare for the new standards. Key findings from the survey, summarized here, reveal the challenges ahead and steps companies are taking now.

The quarter close: Directors edition Q2 2016

06/20/16

This quarterly publication is designed to keep directors informed about the latest accounting and financial reporting issues.

In depth: Retail and consumer industry supplement to leasing standard

05/26/16

This supplement to our In depth on leases highlights areas that could create challenges for retail & consumer companies.

Podcast: Leasing: an overview of the new model

05/13/16

Need to get up to speed on the new leasing standard? This podcast will take you from zero to sixty on the new models for lessee and lessor, and how they can impact you.

The overhaul of lease accounting: Catalyst for change in corporate real estate

04/26/16

This publication discusses the newly-released lease accounting standard and presents considerations for companies that are significant users of real estate.

Podcast: FASB Standard setting update, First quarter 2016

04/25/16

Trying to find an update on FASB standard setting? Stop looking and start listening... Hear about the standards issued in Q1 2016 including leasing, revenue updates, EITF issues and more.