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ASC 842-10-15-3 states: “A contract is or contains a lease if the contract conveys the right to control the use of identified property, plant, or equipment (an identified asset) for a period of time in exchange for consideration.

ASC 840 requires entities to use the rate implicit in the lease (if known) or the entity's incremental borrowing rate. Under ASC 842, entities should first attempt to recognize the lease using the implicit rate. Lessors should know this rate and therefore, are required to use it.

Transition method for ASC 842 ASC 842 requires companies to transition using a modified retrospective method. This means that a cumulative-effect adjustment is made on the initial date of adoption for existing leases.

Under ASC 842, deferred rent is no longer recorded and is replaced by a Right-of-Use (ROU) Asset and Lease Liability.

Under ASC 840-10-15-6 a lease is defined as: An arrangement conveys the right to use property, plant, or equipment if the arrangement conveys to the purchaser (lessee) the right to control the use of the underlying property, plant, or equipment.

ASC 842-10-15-3 A lease conveys the right to use an identified asset for a period of time. Arrangements that are truly perpetual in nature would not meet the definition of a lease because there is no defined period of use.

Under ASC 840, lease classification (that is, determining if a lease is a capital or operating lease) was determined when the lease was executed (i.e. lease inception). Under ASC 842, the lease classification (finance or operating) is determined at lease commencement.

Definition of a lease (2) the right to direct the use of the asset. Under ASC 840-10-15-6 a lease is defined as: An arrangement conveys the right to use property, plant, or equipment if the arrangement conveys to the purchaser (lessee) the right to control the use of the underlying property, plant, or equipment.

ASC 842-10-15-3 states: “A contract is or contains a lease if the contract conveys the right to control the use of identified property, plant, or equipment (an identified asset) for a period of time in exchange for consideration.

ASC 840 requires entities to use the rate implicit in the lease (if known) or the entity's incremental borrowing rate. Under ASC 842, entities should first attempt to recognize the lease using the implicit rate. Lessors should know this rate and therefore, are required to use it.

Transition method for ASC 842 ASC 842 requires companies to transition using a modified retrospective method. This means that a cumulative-effect adjustment is made on the initial date of adoption for existing leases.

Under ASC 842, deferred rent is no longer recorded and is replaced by a Right-of-Use (ROU) Asset and Lease Liability.

Under ASC 840-10-15-6 a lease is defined as: An arrangement conveys the right to use property, plant, or equipment if the arrangement conveys to the purchaser (lessee) the right to control the use of the underlying property, plant, or equipment.

ASC 842-10-15-3 A lease conveys the right to use an identified asset for a period of time. Arrangements that are truly perpetual in nature would not meet the definition of a lease because there is no defined period of use.

Under ASC 840, lease classification (that is, determining if a lease is a capital or operating lease) was determined when the lease was executed (i.e. lease inception). Under ASC 842, the lease classification (finance or operating) is determined at lease commencement.

Definition of a lease (2) the right to direct the use of the asset. Under ASC 840-10-15-6 a lease is defined as: An arrangement conveys the right to use property, plant, or equipment if the arrangement conveys to the purchaser (lessee) the right to control the use of the underlying property, plant, or equipment.