In conjunction with the change of accounting treatment, the guidance also includes expanded disclosure requirements for all leases. Namely, in your post-adoption financial statements, you must carry forward all the disclosures that were required under ASC 840 for comparative periods before the effective date. Lease Classification. ASC 842 maintains the dual classification model, but uses slightly different criteria for classifying assets. ASC 842 contains new and expanded lease disclosure requirements that are significantly more comprehensive and complex than before. Under the prior lease standard (ASC 840), what are the requirements for financial statement presentation and disclosure related to finance and operating leases? Leases were classified as either operating or capital under ASC 840. Learning from revenue recognition. The income statement accounting treatment for the two types of leases does not substantially change from ASC 840. The Related Party Disclosures Topic provides disclosure requirements for related party transactions and certain common control relationships. By way of example, to find disclosure requirements for operating leases, one would start with the topic “Leases” (ASC 840); then go to the subtopic “Operating Leases” (ASC 840-20); then go to the section “Disclosures” (ASC 840-20-50); and then review the paragraphs in that section (e.g., ASC 840-20-50-1). ASC 840 required the same disclosure for operating leases. Accounting and reporting issues concerning certain related party transactions and … ASC 842 is the new lease accounting standard published by the Financial Accounting Standards Board (FASB), which public companies were required to adopt in 2019 and private companies are required to adopt in 2020.ASC 842 requires the tracking and disclosure of all a company's leased assets and replaces the previous US GAAP lease standard, ASC 840. ASC 842, provides an example of how the quantitative disclosure could be displayed in Example 6, ASC 842-20-55-4. ASC 850 Related Party Disclosures. ASC 842, Leases, is a comprehensive change from previous guidance that requires both finance and operating leases to be recognized on the balance sheet, where only finance (historically called capital leases) were recorded previously. Examples of related qualitative disclosures … in accordance with current GAAP (Topic 840, Leases). In preparing our disclosures, we evaluated the guidance in ASC 842-10-65-1(jj) regarding prior periods that continue to be in accordance with ASC 840. ASC Codification Topic 820: Fair Value Measurements and Disclosures: ASC Codification Topic 825: Financial Instruments : ASC Codification Topic 830: Foreign Currency Matters: ASC Codification Topic 835: Interest : ASC Codification Topic 840: Leases: ASC … However, this transition method does include some important new requirements for carrying over comparative disclosures from ASC 840. The new disclosure requirements will potentially require new process and controls, especially related to the accounting for operating leases. An entity that elects this additional (and optional) transition method must provide the required Topic 840 disclosures for all periods that continue to be in accordance with Topic 840. Under the current lease standard (ASC 842), what are the requirements for financial statement presentation and disclosure related to leases? 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