Accounting For Leases: Understanding The Impact Of Asc 842, Leases

The case seeks to contrast the lease accounting under the previous standard (ASC 840) and the guidance to be implemented in 2019 (ASC 842). The case is relevant for accounting majors especially those taking Intermediate Financial Accounting II. It is also relevant for business and finance majors dealing with corporate financial statements. It is also useful for professionals in practice/industry interested in how the new rules will affect their company. In the context of a hypothetical CFO and finance function of a domestic airline company, the case requires the performance of a web search and the procurement of information on former and current lease accounting. The case also requires the write-up of responses to questions comparing and contrasting the old and new guidance under ASC 840 and ASC 842,respectively; and, the creation of Right-of-Use Asset (“ROUA†) and lease amortization schedules. The paper is suitable for undergraduate classes. Individuals or groups may be required to simply write-up their answers to the questions posed or present their research to the class for discussion and comment, especially with regard to the last, optional question. Completion of the case should require 5-10 hours outside of class. Classroom discussion should be about two hours.