How Do I Know If My Lease Has Multiple Lease Components?

June 1, 2017 at 7:26 AM / by Ane Ohm posted in Lease Components, New Lease Standard

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Lease accounting is applied at the lowest asset component. As a result, after you have identified the lease and nonlease components, you as the lessee should determine if the lease contains more than one lease component. You will do this by identifying the individual asset units and their relationships.

You determine if a lease has separate lease components by considering the interdependencies of individual assets covered in a contract. A key consideration is whether the supplier will use multiple assets, or a group of assets that work together, to fulfill the arrangement.

For example, if a customer leases 15 computers and monitors from a technology supplier, then there are clearly multiple assets involved in fulfilling this arrangement.

Is there one or many leases?

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Separating Lease and Nonlease Components

May 24, 2017 at 7:18 AM / by Ane Ohm posted in Lease Components, FASB, New Lease Standard, Lease Payments, IFRS

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Identifying lease and nonlease components

Not all costs related to a lease are included in the leased asset and liability. For example, a lessor may lease a truck and also include a provision to operate the truck on behalf of the lessee. Providing a driver, maintenance and gas are not related to securing the use of the truck and these costs would be considered nonlease components. Another example of a nonlease component is the fee for common area maintenance when renting office space.

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What Qualifies as a Lease under the New Lease Standard?

April 12, 2017 at 7:07 AM / by Ane Ohm posted in New Lease Standard, Lease Payments, IFRS

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Not all arrangements qualify as a lease under the new standard. Of course, sometimes it’s easy to figure out if it’s a lease: renting your office space definitely qualifies as a lease. Copier and vehicle leases are, in fact, leases.

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Top Resource Guides for the New Lease Standard

April 1, 2017 at 6:40 AM / by Ane Ohm posted in FASB, New Lease Standard, IFRS

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The new lease standard is coming and preparation is critical for a smooth implementation. This is easier said than done and the experts agree: this new standard is complicated.

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Why Is There A New Lease Standard?

March 7, 2017 at 4:12 PM / by Ane Ohm posted in FASB, New Lease Standard, Lease Payments, IFRS

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The new U.S. lease standard, ASC 842, is required for public companies starting their fiscal year after December 15, 2018 and all other companies starting their fiscal year after December 15, 2019. Internationally, the cousin of ASC 842 is IFRS 16, which is effective for annual periods beginning on or after January 1, 2019.

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