The FASBs revised standard on leases, ASC 842, was effective for public companies beginning 2018. One significant
Question:
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.
Required:
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),
(d) how the new treatment for operating leases affects the audit.
Balance SheetBalance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial...
Step by Step Answer:
Auditing & Assurance Services A Systematic Approach
ISBN: 978-1260687637
11th Edition
Authors: William F Messier Jr, Steven M Glover, Douglas F Prawitt