How FASB’s new ASC 842 transition option will affect lessees and investors

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Apr 11, 2018

On April 11, 2018, Accounting Today released an article where they discuss the new optional transition method for lessees under the ASC 842 lease accounting standards. The new method would provide an alternative to the modified retrospective transition method.

The new transition option allows companies to forgo the comparative reporting requirements entirely. Instead, they would “recognize a cumulative-effect adjustment to the opening balance of retained earnings” at their adoption date rather than on January 1, 2017, according to FASB. In other words, now companies only have to transition to the new standards at the effective date, instead of having to apply the new standards for two years prior to the effective date.

This article reviews how the new transition method will affect two of the main stakeholders of the new lease accounting standards: the lessees and the investors.

Review the full article on Accounting Today's website.

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