Read SEC Filing Excerpts from the Top 100 US Companies
Published April 2018
As the deadlines for ASC 842 get closer, companies will be required to issue SAB 74 Disclosures about the effects that the new standards might have. In an effort to assist the industry with accelerated adoption of ASC 842, LeaseAccelerator compiled a Lease Accounting SAB 74 Disclosures Analysis report with examples from 100 SEC registrants over the past 15 months. The study focuses on the top 100 US public companies as ranked by the total leasing obligations tabularized in the footnotes of annual filings. The source of the data was 10-Q and 10-K filings submitted between January 1, 2017 and March 31, 2018 .
Impacts to Financial Statements
- Balance Sheet Impact
- Income Statement Impact
- Cash Flow Statement Impact
- Elections of Practical Expedients
Progress on ASC 842 Implementation
- Lease Accounting Project Teams
- Financial Policies and Controls
- Lease Accounting Software
- Business Processes
Key Findings from the Lease Accounting SAB 74 Disclosure Analysis Report
With the revenue recognition standard (ASC 606), a number of companies, including Alphabet, Microsoft, General Dynamics, Ford, and Raytheon, were early adopters. Only one of the 100 companies analyzed, Microsoft, adopted the ASC 842 standards early. No other companies stated their intention to early adopt.
At the time these disclosures were analyzed, the only available transition approach for lessees was the modified retrospective approach, so companies either said they would elect that approach or did not comment on the approach. However, a new transition approach was proposed in November 2017 and approved in March 2018. We expect companies to state their selection of transition method in their next disclosures.
Material Impacts to Balance Sheets
As expected, the new right-of-use assets and liabilities being added to balance sheets are expected to be the most material impact to financial statements. 76% of the Top 100 reported that there will be a material impact resulting from the transfer of most right-of-use assets and liabilities on to corporate balance sheets. Another 20% are still analyzing the potential impacts of the new standard.
To learn more about the findings, download the Lease Accounting SAB 74 Disclosures report.