Initial Application Date
      Back to home
      1. Knowledge Base
      2. FAQ
      3. Initial Application Date

      What is my Initial Application Date under ASC 842?

      The Initial Application Date is the beginning of the earliest period presented in the financial statements in which the lease standard is first applied.  The Lessee will apply the Lease Standard either to all reporting periods presented in the financial statements or to only the most recent period, without restating prior periods.  In order to select your Initial Application Date, you must first determine your Effective Date.  U.S public companies and international companies (under IFRS 16) have an Effective Date for fiscal years beginning after December 15, 2018, while U.S. private companies have an Effective Date for fiscal years beginning after December 15, 2021.  

      Need some assistance? 

      Examples as follows:

      • If lessees have a 12/31 fiscal year end and are choosing to apply the lease standard to only the most recent period without restating prior periods, the Initial Application Date will be 1/1/22. (Effective Date Method)
      • If lessees have a 12/31 fiscal year end and are choosing to apply the lease standard retrospectively to all prior reporting periods with the cumulative impact reported in retained earnings in the first year presented, the Initial Application Date will be the first of the earliest fiscal year presented. (Comparative Method)
      • If lessees have a 6/30 fiscal year end and are choosing to apply the lease standard to only the most recent period without restating prior periods, the Initial Application Date will be 7/1/22. (Effective Date Method)
      • If lessees have a 6/30 fiscal year end and are choosing to apply the lease standard retrospectively to all prior reporting periods with the cumulative impact reported in retained earnings in the first year presented, the Initial Application Date will be the first of the earliest fiscal year presented. (Comparative Method)

      Items of note:

      • The Initial Application Date is not the start date of your earliest lease.
      • The Initial Application Date under FASB ASC 842 is generally not prior to 2022 for non-public entities.