Troy University FASB ASC 842 on The Treatment of Operating Leases Memorandum

The FASB’s revised standard on leases, ASC 842, was effective for public companies beginning 2018. One significant implication of this standard is that operating leases that were previously kept off the balance sheet are now required to be recorded on the balance sheet as a liability.

Use the internet to learn more about FASB ASC Topic 842, Leases. Write a brief memo describing (a) whether you agree with the FASB’s decision to move operating leases to the balance sheet, (b) the expected magnitude of the operating lease liabilities that will be added to balance sheets in the United States, (c) how these new liabilities are being treated for purposes of computing debt covenant compliance by different users (investors, lenders, management), and (d) how the new treatment for operating leases affects the audit.

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