REAC Issues Guidance on ASC 842 Lease Standard

With the recent adoption of ASC 842 and the year-end rapidly approaching, AHACPA has received many questions related to what REAC would be doing to accommodate the change in accounting. Today, we found out. The following was posted on REAC’s website Thursday:

New Lease Standard from FASB (ASC 842)

Some leases will need to be recorded as assets on the balance sheet in the financial statements. These will be known as right-to-use assets. The amount represents the net present value of the lease. In response to this change in accounting standards, we have added an account to the drop-down list for Account 1590, Miscellaneous Other Assets, titled “Right-to-Use Asset.”

This is in line with our expectations. It also aligns with the position of several early-adopting firms. We believe this is the best fit for REAC given the challenges of creating new line items in the Chart of Accounts. Unfortunately, there was no guidance given on the account for the liabilities that may be created. Until REAC issues additional guidance, AHACPA recommends using account 2390 – Other Long-term Liabilities for lease liabilities.

Further, we have not received any communication on the adoption of ASC 842 for the Section 232 entities operating leased nursing or assisted living facilities.

The updated drop-down list for account 1590 is already in place, as is shown in the screenshot below:

Miscellaneous Other Assets Drop Down

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