GAAP for Leases
Please see below for additional instructions and information regarding this program.
The Financial Accounting Standards Board revolutionized accounting for leases with the issuance of Accounting Standards Update 2016-02. The new lease accounting rules will have a major impact on the financial statements of any organization that leases any type of property or equipment, and may have a detrimental impact on contractual obligations, such as loan covenants. The new rules are already in effect for public companies and will go into effect for private companies and nonprofits in 2021. This course will familiarize you with the new rules and will help you navigate their complexity.
•What is a Right of Use Asset?
•Types of Arrangements that are Subject to the New Accounting Rules for Leases
•The Four Steps necessary to Calculate the Right of Use Asset
•Determining the Lease Term
•Identifying the Various Types of Lease Payments
•Choosing a Suitable Discount Rate
•Additional Elements Incorporated into the ROU Asset
•The 12-Month Policy Election
•Accounting for Operating Leases Under the New Standard
•Accounting for Finance Leases Under the New Standard
- Nature of Property 00:05:19
- Lease Defined 00:08:59
- Right to Control 00:11:56
- Embedded Leases 00:14:21
- Calculating ROU Asset 00:16:40
- Determining Lease Term 00:26:07
- Renewal Options 00:29:11
- Identifying Lease Payments 00:31:41
- Lease Payment Issues 00:35:27
- Segregating Lease Components 00:39:22
- Example: Contract Components 00:40:08
- Solution 00:40:53
- Determining Discount Rate 00:43:20
- Example 00:46:38
- Solution: Step 1 Determine the Lease Term 00:48:02
- Solution: Step 2 Identify Lease Payments 00:49:31
- Solution: Step 3 Determine the Discount Rate 00:50:15
- Solution: Step 4 Identify ROU Asset Elements 00:51:31
- Calculation of Lease Liability 00:52:26
- Calculation of ROU Asset 00:54:25
- 12- Month Policy 00:56:34
- Finance vs. Operating Leases 00:59:55
- Financing Lease Criteria 01:01:06
- General Considerations 01:04:45
- Lessee Accounting: Operating Leases 01:07:36, 01:08:00
- Operating Lease Example 01:09:24
- Operating Lease Example: Year 1 01:11:03, 01:11:47, 01:15:08, 01:17:30
- Operating Lease Example: Year 2 01:16:20
- Operating Lease Example: Year 3 01:18:32
- Lessee Accounting: Finance Leases 01:20:48, 01:28:11
- Finance Lease Example 01:31:21, 01:32:48
- Finance Lease Example: Year 1 01:33:31, 01:34:07
- Finance Lease Example: Year 2 01:37:04
- Lessor Accounting: Minimal Changes 01:39:20
- Thank you/Presentation Closing 01:40:44
- Accreted Interest 01:14:04
- Amortization 00:59:55, 01:14:11
- Asset 00:01:49
- Copyright 00:11:40
- Lease Liability 00:52:31, 00:54:41
- Lessee 00:45:31, 01:07:46
- Lessor 00:43:43
- Liability 00:01:49
- Right-of-Use asset (ROU asset) 00:03:00, 00:15:50, 00:16:48, 00:40:48, 00:54:31
Accreted Interest : Accreted Interest means interest accrued on a Loan Asset that is added to the principal amount of such Loan Asset instead of being paid as interest as it accrues.
Amortization: An accounting term that refers to the process of allocating the cost of an intangible asset over a period of time. It also refers to the repayment of loan principal over time. (investinganswers.com)
Asset: Property owned by a person or company, regarded as having value and available to meet debts, commitments or legacies.
Copyright : Copyright is the exclusive right given to the creator of a creative work to reproduce the work, usually for a limited time. The creative work may be in a literary, artistic, educational, or musical form.
Lease Liability: In accounting, a lease liability is a financial obligation to make the payments arising from a lease, measured on a discounted basis. Lease liability is calculated using the present value of the lease payments over the lease term discounted, typically, using the lessee's incremental borrowing rate.
Lessee: In a lease agreement, the lessee is defined as the party that pays for the use of the asset or property.
Lessor: One that transfers property (such as a house or a car) by a contract. The lessor is the party that receives payments from the lessee in exchange for the usage of its asset or property.
Liability: In financial accounting, a liability is defined as the future sacrifices of economic benefits that the entity is obliged to make to other entities as a result of past transactions or other past events, the settlement of which may result in the transfer or use of assets, provision of services or other yielding of economic benefits in the future.
Right-of-Use asset (ROU asset): In accounting, the right-of-use asset (ROU asset) arises from a lease agreement and represents the lessee's license to hold, operate, or occupy the leased property or item over the lease term. The asset is calculated as the initial amount of the lease liability, plus any lease payments made to the lessor before the lease commencement date, plus any initial direct costs incurred, minus any lease incentives received.
Chuck Borek is a practicing attorney and founder of the Borek Group, LLC. Chuck is also a CPA, and his background includes five years as a partner in a public accounting firm. He received his law degree and MBA summa cum laude from the University of Baltimore in 1993, where he was editor-in-chief of the Law Review. He has been teaching professionally since 1989, including four years as an Associate Professor of Accounting and two years as a Visiting Assistant Professor of Law. He ha... View Full Profile
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