The New Lease Accounting Standards | LeaseCrunch (2024)

Because this is a judgment-based standard, judgment is often required to determine whether a contract qualifies as a lease under the new standard (this makes it an excellent area to add value for your clients). Use the following guidelines to determine what qualifies as a lease:

• It must be a physical asset.
• You must have the right to control or use the asset.
• The asset must be explicitly or implicitly identified.

Examples of leases include (but are not exclusive to) rental of office space, photocopiers, computers and servers, vehicles, land, and equipment. Examples of what are not typically considered leases under this standard include software subscriptions, leases for intangible assets, leases for exploration or use of non-renewable resources, and leases of inventory or assets under construction.

It’s also important to note that not all costs related to a lease are included in the leased asset and liability, so part of determining exactly what is a lease will be separating lease and non-lease components. There is no hard and fast rule, as the new lease standard requires quite a bit of judgment, but the key is thinking about the intent of a particular payment. Common items that are likely to be non-lease components include common area maintenance and service contracts for the leased asset.

When reviewing lease contracts, it is also important to determine if there are multiple lease components and, if so, whether those components need to be tracked as separate leases on your books, perhaps because they are designed to function separately or they have significantly different economic lives to evaluate. Don't forget to take advantage of the portfolio exception, where separate assets have such similar terms and characteristics that they can be combined into a single lease for reporting purposes.

Because this is a judgment-based standard, judgment is often required to determine whether a contract qualifies as a lease under the new standard (this makes it an excellent area to add value for your clients). Use the following guidelines to determine what qualifies as a lease:

1. It must be a physical asset.
2. You must have the right to control or use the asset.
3. The asset must be explicitly or implicitly identified.

Examples of leases include (but are not exclusive to) rental of office space, photocopiers, computers and servers, vehicles, land, and equipment. Examples of what are not typically considered leases under this standard include software subscriptions, leases for intangible assets, leases for exploration or use of non-renewable resources, and leases of inventory or assets under construction.

It’s also important to note that not all costs related to a lease are included in the leased asset and liability, so part of determining exactly what is a lease will be separating lease and non-lease components. There is no hard and fast rule, as the new lease standard requires quite a bit of judgment, but the key is thinking about the intent of a particular payment. Common items that are likely to be non-lease components include common area maintenance and service contracts for the leased asset.

When reviewing lease contracts, it is also important to determine if there are multiple lease components and, if so, whether those components need to be tracked as separate leases on your books, perhaps because they are designed to function separately or they have significantly different economic lives to evaluate. Don't forget to take advantage of the portfolio exception, where separate assets have such similar terms and characteristics that they can be combined into a single lease for reporting purposes.

Because this is a judgment-based standard, judgment is often required to determine whether a contract qualifies as a lease under the new standard (this makes it an excellent area to add value for your clients). Use the following guidelines to determine what qualifies as a lease:

1. It must be a physical asset.
2. You must have the right to control or use the asset.
3. The asset must be explicitly or implicitly identified.

Examples of leases include (but are not exclusive to) rental of office space, photocopiers, computers and servers, vehicles, land, and equipment. Examples of what are not typically considered leases under this standard include software subscriptions, leases for intangible assets, leases for exploration or use of non-renewable resources, and leases of inventory or assets under construction.

It’s also important to note that not all costs related to a lease are included in the leased asset and liability, so part of determining exactly what is a lease will be separating lease and non-lease components. There is no hard and fast rule, as the new lease standard requires quite a bit of judgment, but the key is thinking about the intent of a particular payment. Common items that are likely to be non-lease components include common area maintenance and service contracts for the leased asset.

When reviewing lease contracts, it is also important to determine if there are multiple lease components and, if so, whether those components need to be tracked as separate leases on your books, perhaps because they are designed to function separately or they have significantly different economic lives to evaluate. Don't forget to take advantage of the portfolio exception, where separate assets have such similar terms and characteristics that they can be combined into a single lease for reporting purposes.

Because this is a judgment-based standard, judgment is often required to determine whether a contract qualifies as a lease under the new standard (this makes it an excellent area to add value for your clients). Use the following guidelines to determine what qualifies as a lease:

1. It must be a physical asset.
2. You must have the right to control or use the asset.
3. The asset must be explicitly or implicitly identified.

Examples of leases include (but are not exclusive to) rental of office space, photocopiers, computers and servers, vehicles, land, and equipment. Examples of what are not typically considered leases under this standard include software subscriptions, leases for intangible assets, leases for exploration or use of non-renewable resources, and leases of inventory or assets under construction.

It’s also important to note that not all costs related to a lease are included in the leased asset and liability, so part of determining exactly what is a lease will be separating lease and non-lease components. There is no hard and fast rule, as the new lease standard requires quite a bit of judgment, but the key is thinking about the intent of a particular payment. Common items that are likely to be non-lease components include common area maintenance and service contracts for the leased asset.

When reviewing lease contracts, it is also important to determine if there are multiple lease components and, if so, whether those components need to be tracked as separate leases on your books, perhaps because they are designed to function separately or they have significantly different economic lives to evaluate. Don't forget to take advantage of the portfolio exception, where separate assets have such similar terms and characteristics that they can be combined into a single lease for reporting purposes.

Because this is a judgment-based standard, judgment is often required to determine whether a contract qualifies as a lease under the new standard (this makes it an excellent area to add value for your clients). Use the following guidelines to determine what qualifies as a lease:

1. It must be a physical asset.
2. You must have the right to control or use the asset.
3. The asset must be explicitly or implicitly identified.

Examples of leases include (but are not exclusive to) rental of office space, photocopiers, computers and servers, vehicles, land, and equipment. Examples of what are not typically considered leases under this standard include software subscriptions, leases for intangible assets, leases for exploration or use of non-renewable resources, and leases of inventory or assets under construction.

It’s also important to note that not all costs related to a lease are included in the leased asset and liability, so part of determining exactly what is a lease will be separating lease and non-lease components. There is no hard and fast rule, as the new lease standard requires quite a bit of judgment, but the key is thinking about the intent of a particular payment. Common items that are likely to be non-lease components include common area maintenance and service contracts for the leased asset.

When reviewing lease contracts, it is also important to determine if there are multiple lease components and, if so, whether those components need to be tracked as separate leases on your books, perhaps because they are designed to function separately or they have significantly different economic lives to evaluate. Don't forget to take advantage of the portfolio exception, where separate assets have such similar terms and characteristics that they can be combined into a single lease for reporting purposes.

Because this is a judgment-based standard, judgment is often required to determine whether a contract qualifies as a lease under the new standard (this makes it an excellent area to add value for your clients). Use the following guidelines to determine what qualifies as a lease:

1. It must be a physical asset.
2. You must have the right to control or use the asset.
3. The asset must be explicitly or implicitly identified.

Examples of leases include (but are not exclusive to) rental of office space, photocopiers, computers and servers, vehicles, land, and equipment. Examples of what are not typically considered leases under this standard include software subscriptions, leases for intangible assets, leases for exploration or use of non-renewable resources, and leases of inventory or assets under construction.

It’s also important to note that not all costs related to a lease are included in the leased asset and liability, so part of determining exactly what is a lease will be separating lease and non-lease components. There is no hard and fast rule, as the new lease standard requires quite a bit of judgment, but the key is thinking about the intent of a particular payment. Common items that are likely to be non-lease components include common area maintenance and service contracts for the leased asset.

When reviewing lease contracts, it is also important to determine if there are multiple lease components and, if so, whether those components need to be tracked as separate leases on your books, perhaps because they are designed to function separately or they have significantly different economic lives to evaluate. Don't forget to take advantage of the portfolio exception, where separate assets have such similar terms and characteristics that they can be combined into a single lease for reporting purposes.

Because this is a judgment-based standard, judgment is often required to determine whether a contract qualifies as a lease under the new standard (this makes it an excellent area to add value for your clients). Use the following guidelines to determine what qualifies as a lease:

1. It must be a physical asset.
2. You must have the right to control or use the asset.
3. The asset must be explicitly or implicitly identified.

Examples of leases include (but are not exclusive to) rental of office space, photocopiers, computers and servers, vehicles, land, and equipment. Examples of what are not typically considered leases under this standard include software subscriptions, leases for intangible assets, leases for exploration or use of non-renewable resources, and leases of inventory or assets under construction.

It’s also important to note that not all costs related to a lease are included in the leased asset and liability, so part of determining exactly what is a lease will be separating lease and non-lease components. There is no hard and fast rule, as the new lease standard requires quite a bit of judgment, but the key is thinking about the intent of a particular payment. Common items that are likely to be non-lease components include common area maintenance and service contracts for the leased asset.

When reviewing lease contracts, it is also important to determine if there are multiple lease components and, if so, whether those components need to be tracked as separate leases on your books, perhaps because they are designed to function separately or they have significantly different economic lives to evaluate. Don't forget to take advantage of the portfolio exception, where separate assets have such similar terms and characteristics that they can be combined into a single lease for reporting purposes.

Because this is a judgment-based standard, judgment is often required to determine whether a contract qualifies as a lease under the new standard (this makes it an excellent area to add value for your clients). Use the following guidelines to determine what qualifies as a lease:

1. It must be a physical asset.
2. You must have the right to control or use the asset.
3. The asset must be explicitly or implicitly identified.

Examples of leases include (but are not exclusive to) rental of office space, photocopiers, computers and servers, vehicles, land, and equipment. Examples of what are not typically considered leases under this standard include software subscriptions, leases for intangible assets, leases for exploration or use of non-renewable resources, and leases of inventory or assets under construction.

It’s also important to note that not all costs related to a lease are included in the leased asset and liability, so part of determining exactly what is a lease will be separating lease and non-lease components. There is no hard and fast rule, as the new lease standard requires quite a bit of judgment, but the key is thinking about the intent of a particular payment. Common items that are likely to be non-lease components include common area maintenance and service contracts for the leased asset.

When reviewing lease contracts, it is also important to determine if there are multiple lease components and, if so, whether those components need to be tracked as separate leases on your books, perhaps because they are designed to function separately or they have significantly different economic lives to evaluate. Don't forget to take advantage of the portfolio exception, where separate assets have such similar terms and characteristics that they can be combined into a single lease for reporting purposes.

Because this is a judgment-based standard, judgment is often required to determine whether a contract qualifies as a lease under the new standard (this makes it an excellent area to add value for your clients). Use the following guidelines to determine what qualifies as a lease:

1. It must be a physical asset.
2. You must have the right to control or use the asset.
3. The asset must be explicitly or implicitly identified.

Examples of leases include (but are not exclusive to) rental of office space, photocopiers, computers and servers, vehicles, land, and equipment. Examples of what are not typically considered leases under this standard include software subscriptions, leases for intangible assets, leases for exploration or use of non-renewable resources, and leases of inventory or assets under construction.

It’s also important to note that not all costs related to a lease are included in the leased asset and liability, so part of determining exactly what is a lease will be separating lease and non-lease components. There is no hard and fast rule, as the new lease standard requires quite a bit of judgment, but the key is thinking about the intent of a particular payment. Common items that are likely to be non-lease components include common area maintenance and service contracts for the leased asset.

When reviewing lease contracts, it is also important to determine if there are multiple lease components and, if so, whether those components need to be tracked as separate leases on your books, perhaps because they are designed to function separately or they have significantly different economic lives to evaluate. Don't forget to take advantage of the portfolio exception, where separate assets have such similar terms and characteristics that they can be combined into a single lease for reporting purposes.

Because this is a judgment-based standard, judgment is often required to determine whether a contract qualifies as a lease under the new standard (this makes it an excellent area to add value for your clients). Use the following guidelines to determine what qualifies as a lease:

1. It must be a physical asset.
2. You must have the right to control or use the asset.
3. The asset must be explicitly or implicitly identified.

Examples of leases include (but are not exclusive to) rental of office space, photocopiers, computers and servers, vehicles, land, and equipment. Examples of what are not typically considered leases under this standard include software subscriptions, leases for intangible assets, leases for exploration or use of non-renewable resources, and leases of inventory or assets under construction.

It’s also important to note that not all costs related to a lease are included in the leased asset and liability, so part of determining exactly what is a lease will be separating lease and non-lease components. There is no hard and fast rule, as the new lease standard requires quite a bit of judgment, but the key is thinking about the intent of a particular payment. Common items that are likely to be non-lease components include common area maintenance and service contracts for the leased asset.

When reviewing lease contracts, it is also important to determine if there are multiple lease components and, if so, whether those components need to be tracked as separate leases on your books, perhaps because they are designed to function separately or they have significantly different economic lives to evaluate. Don't forget to take advantage of the portfolio exception, where separate assets have such similar terms and characteristics that they can be combined into a single lease for reporting purposes.

Because this is a judgment-based standard, judgment is often required to determine whether a contract qualifies as a lease under the new standard (this makes it an excellent area to add value for your clients). Use the following guidelines to determine what qualifies as a lease:

1. It must be a physical asset.
2. You must have the right to control or use the asset.
3. The asset must be explicitly or implicitly identified.

Examples of leases include (but are not exclusive to) rental of office space, photocopiers, computers and servers, vehicles, land, and equipment. Examples of what are not typically considered leases under this standard include software subscriptions, leases for intangible assets, leases for exploration or use of non-renewable resources, and leases of inventory or assets under construction.

It’s also important to note that not all costs related to a lease are included in the leased asset and liability, so part of determining exactly what is a lease will be separating lease and non-lease components. There is no hard and fast rule, as the new lease standard requires quite a bit of judgment, but the key is thinking about the intent of a particular payment. Common items that are likely to be non-lease components include common area maintenance and service contracts for the leased asset.

When reviewing lease contracts, it is also important to determine if there are multiple lease components and, if so, whether those components need to be tracked as separate leases on your books, perhaps because they are designed to function separately or they have significantly different economic lives to evaluate. Don't forget to take advantage of the portfolio exception, where separate assets have such similar terms and characteristics that they can be combined into a single lease for reporting purposes.