Page 293 - pwc-lease-accounting-guide_Neat
P. 293
Effective date and transition
Triggering event
occurs on
12/31/2018 or Hindsight practical expedient Hindsight practical expedient
earlier is not elected is elected
The entity chooses to At transition, adjust comparative At transition, adjust comparative
adjust comparative periods as follows: periods as follows:
periods (2017 & 2018)
□ As of 1/1/2017, calculate the □ As of 1/1/2017, calculate the
transition lease liability and transition lease liability and the
the right-of-use asset based on right-of-use asset based on
the old lease payment data revised information considering
under ASC 840. Refer to LG the triggering event. Refer to LG
10.4.1 and LG 10.4.2 for 10.3.1.2, LG 10.4.1, and LG
transition accounting for 10.4.2. Differences between the
operating and capital leases, lease liability and the right-of-
respectively. Differences use asset not otherwise specified
between the lease liability and would be recorded in opening
the right-of-use asset not equity (as of 1/1/2017).
otherwise specified would be □ Roll the amounts forward for
recorded in opening equity (as
of 1/1/2017). 2017 and 2018 following the
subsequent measurement
□ Roll the amounts forward for requirements in the leases
2017 and 2018 following the guidance with differences, if
subsequent measurement any, recorded to the P&L in the
requirements in the leases comparative periods (refer to LG
guidance with adjustments, if 10.4.1.5 and LG 10.4.2).
any, recorded to the P&L in
the comparative periods (refer
to LG 10.4.1.5 and LG 10.4.2).
Note that for remeasurement triggering events that occur after the effective date of the leases guidance
(for example, an event on January 2, 2019 for a public calendar year-end company) a lessee should
follow the leases guidance discussed in LG 5.3.
10.5 Lessor transition
The transition guidance for a lessor differs in some respects depending on the classification of the
lease. Given that the practical expedients discussed in LG 10.3.1.1 allow reporting entities to avoid
reconsidering lease classification, we expect that many lease arrangements will retain their original
classification and therefore, the accounting for a change in classification is not discussed in this guide.
Readers should refer to ASC 842-10-65-1 for guidance.
10.5.1 Operating leases
If a lease was classified as an operating lease under the guidance in ASC 840 and will continue to be
classified as an operating lease under the leases standard, the lessor should continue to recognize the
carrying amount of the underlying asset and any lease assets or liabilities (for example, prepaid or
deferred rent) at the same amounts previously recognized in accordance with ASC 840. However, refer
to LG 10.3.1.2 when the hindsight practical expedient is elected.
10-21
