A PDF version of this publication is attached here: Leases guide (PDF 3.7mb)
PwC is pleased to offer our updated Leases guide. The FASB’s new standard on leases, ASC 842, is effective for all entities. This guide discusses lessee and lessor accounting under ASC 842. The first four chapters provide an introduction and guidance on determining whether an arrangement is (or contains) a lease and how to classify and account for lease and nonlease components. This guide also discusses the modification, remeasurement, and termination of a lease, sale and leaseback transactions, leveraged lease transactions, as well as other topics. Chapter 9 addresses the effective date and transition. Presentation is addressed in the Financial statement presentation guide.
This guide summarizes the applicable accounting literature, including relevant references to and excerpts from the FASB’s Accounting Standards Codification (the Codification). It also provides our insights and perspectives, interpretative and application guidance, illustrative examples, and discussion on emerging practice issues.
This guide should be used in combination with a thorough analysis of the relevant facts and circumstances, review of the authoritative accounting literature, and appropriate professional and technical advice.
References to US GAAP
Definitions, full paragraphs, and excerpts from the FASB’s Accounting Standards Codification are clearly labelled. In some instances, guidance was cited with minor editorial modification to flow in the context of the PwC Guide. The remaining text is PwC’s original content.
References to other PwC guidance
This guide provides general and specific references to chapters in other PwC guides to assist users in finding other relevant information. References to other guides are indicated by the applicable guide abbreviation followed by the specific section number. The other PwC guides referred to in this guide, including their abbreviations, are:
  • Business combinations and noncontrolling interests (BCG)
  • Bankruptcies and liquidations (BLG)
  • Consolidation (CG)
  • Financial statement presentation (FSP)
  • Financing transactions (FG)
  • Income taxes (TX)
  • Loans and investments (LI)
  • Revenue from contracts with customers (RR)
  • Transfers and servicing of financial assets (TS)
Summary of significant changes
Following is a summary of the noteworthy revisions. Additional updates may be made to keep pace with significant developments.
Revisions made in January 2024
LG 9, Presentation and disclosure
  • LG 9.2.3 was moved to FSP 6.8.16, LG 9.3.3 was moved to FSP 6.8.17, and the remaining content in LG 9 was moved to FSP 14 now that ASC 842 is effective for all entities.

LG 10, Effective date and transition
The content in LG 10 was moved to LG 9.

Revisions made in May 2023
LG 3, Classification
  • LG was added to reflect the issuance of ASU 2023-01, Common Control Arrangements.
  • Example LG 3-3 in LG was updated to illustrate a lessee-sublessor’s determination of the lease term of a sublease (as a sublessor), and how that evaluation affects its consideration of the lease term of its head lease (as a lessee).

LG 8, Other topics
  • LG 8.11 was added to describe guidance on amortization of leasehold improvements, and for leases between entities under common control, how that guidance is affected by the issuance of ASU 2023-01, Common Control Arrangements.

This publication has been prepared for general informational purposes, and does not constitute professional advice on facts and circumstances specific to any person or entity. You should not act upon the information contained in this publication without obtaining specific professional advice. No representation or warranty (express or implied) is given as to the accuracy or completeness of the information contained in this publication. The information contained in this publication was not intended or written to be used, and cannot be used, for purposes of avoiding penalties or sanctions imposed by any government or other regulatory body. PricewaterhouseCoopers LLP, its members, employees, and agents shall not be responsible for any loss sustained by any person or entity that relies on the information contained in this publication. Certain aspects of this publication may be superseded as new guidance or interpretations emerge. Financial statement preparers and other users of this publication are therefore cautioned to stay abreast of and carefully evaluate subsequent authoritative and interpretative guidance.
The FASB material is copyrighted by the Financial Accounting Foundation, 401 Merritt 7, Norwalk, CT 06856, and is reproduced with permission.
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