1. Help Center
  2. Lease Accounting
  3. Understanding ASC 842 and IFRS 16

What is the Income Statement Impact of ASC 842?

A lessee shall present on the income statement the following, based on lease classification:

Lease Type

Statement of Comprehensive Income 

Finance Lease

  • Interest Expense on the lease liability 
  • Right-of-use asset amortization
  • These expenses are not required to be presented as separate line items and shall be presented in a manner consistent with how the entity presents other interest expense and depreciation or amortization of similar assets, respectively.

Operating Lease

  • Lease expense shall be included in the lessee’s income from continuing operations.

Accounting Guidance Referenced:

  • ASC 842-20-45-4