Deloitte Answers Questions about FASB's New Leases Standard to Help Entities Work Through Implementation Issues

What:      

Frequently Asked Questions About the FASB's New Leases Standard

Who:       

James Barker, senior consultation partner, national office accounting services, Deloitte & Touche LLP

Sean Torr, Deloitte Risk and Financial Advisory managing director, Deloitte & Touche LLP

When:     

Available immediately

Details:    

The FASB's new leases accounting standard does not take effect until 2019, yet many entities are uncovering complications and raising questions about implementation methods well in advance.

Deloitte's new "Heads Up" publication features a series of emerging questions about the new leases standard and provides detailed technical interpretations and specific guidance to assist companies with implementation. Topics range from clarifying the definition of a lease to discussing lease payments and lessor/lessee models.

Using industry-based hypothetical examples, Deloitte delivers guidance on key areas such as considerations in establishing capitalization thresholds; tax attributes; recognition of profits and losses in operating leases; variable payments; considerations related to right-of-use assets: lease classifications; as well as presentation and disclosure requirements.

Sample questions in the new "Heads Up" include:

• Can a lessee use an appropriate capitalization threshold when evaluating the requirement to recognize, on the balance sheet, leases that otherwise require recognition under the FASB Accounting Standards Update? 
  
  
• Does an entity need to evaluate a service arrangement that involves the use of property, plant and equipment to determine whether the arrangement contains a lease? 
  
  
• Should an entity (lessee or lessor) include noncash consideration in its determination of lease payments?
  
  
• Do index- or rate-based payment adjustments in a lease require the lessee to re-measure the lease?

Under the new leases standard, entities will have to consider transition challenges including making judgments as to what qualifies as a lease under the new standard, managing complex data collection and storage, improving information technology infrastructure necessary for compliance, sharpening internal controls and addressing tax implications.

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