Published: 11 March 2019
Analyst(s): Finance Research Team
The new lease accounting standards (ASC 842/IFRS 16) require corporate controllers and chief accounting leaders to apply more judgment as they adopt and comply with the new rules. Learn where accounting leaders and teams are applying significant judgment and the factors influencing their decisions.
Areas of Significant Judgment
Determining Short-Term Leases and Extension Options
Conditions to Qualify for the Short-term Lease Exemption
Challenge 1: Continually-Extended Short-Term Leases May Not Qualify
Challenge 2: Defining Reasonable Certainty
Accounting Leaders’ Experiences With Variable-Term Leases
Setting Materiality Thresholds and Defining Leases of Low-Value Assets
Challenge 3: Putting a Dollar Value on Materiality
Approaches to Determining Materiality
Approach to Low-Value Leases
Recommended by the Authors
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