FAR — Quick Sheet
Leases (ASC 842)
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- Both finance & operating leases → ROU asset + lease liability at PV of payments (lessee)
- 5 finance-lease tests: ownership transfer, purchase option reasonably certain, major part of remaining life, PV ≈ substantially all FV, no alternative use
- Finance lease: separate interest + amortization → front-loaded expense
- Operating lease: single straight-line lease expense
- Short-term leases (≤12 months, no certain purchase option): exempt, can stay off balance sheet