Question

The new lease standard has an adoption date for publicly traded companies for annual periods beginning after December 15, 2018. What are the differences between the old and new lease standard and which standard requires more judgment.

Answer 1

Answer:

Differences between old and new lease standard:

Time value :

• In the new standard ,time estimation of cash is being considered.

Present estimation of rent installment must be determined for every one of the leases.

• In prior standard ,just capital leases were available esteemed.

Profit and loss:

• In the new lease standard ,interest and depreciation will be recorded.
• In prior standard ,just rent cost were recorded .interest and depreciation were recorded uniquely for capital leases.

Balance sheet:

• In the new lease standard ,asset will be made and deteriorated as needs be.

Judgment:

Judgment is required in both the models,

• Anyway prior standard was requiring part of judgment to distinguish rent whether it is capital rent or working lease and dependent on which accounting would be characterized.