FASB has issues a post-implementation review of ASC 842, taking an extended look at how the leases standard has worked since its initial release in 2016. The review states that the standard was generally successful in its goal of providing investors with better information about leasing activity, although the implementation process was much more costly and complicated for many preparers than anticipated. 

The report states that lessees faced the steepest challenges. Many organizations told FASB that their existing systems could not support bringing operating leases onto the balance sheet, which required extensive data collection, contract analysis, system upgrades, and process redesign.

Stakeholders described these initial efforts as far more resource-intensive than anticipated at issuance. Ongoing application costs also exceeded expectations for some entities, as lease data had to be continually maintained and integrated across accounting, finance, and operational systems. 

This review presents a slightly different picture for lessors with most lessor entities reporting a little difficulty in implementing or applying the updated guidance, and investor feedback indicated general satisfaction with the information provided under the lesser model. 

FASB’s analysis also highlights that investor perspectives on lessee disclosure vary, although many see the recognized lease assets and liabilities as a useful starting point for comparisons of entities. The conclusions are based on significant outreach, including comments from more than 1,600 stakeholders. 

In the introductory letter, FASB Chairman Richard R. Jones and Technical Director Jackson M. Day expressed that although the PIR was complete, the Board would continue to monitor application challenges and make future refinements when appropriate.