ASC 842
Category
ASC 842
ASC 842 (Leases) is the US GAAP lease accounting standard issued by FASB, effective for public companies since 2019 and private companies since 2022. It requires lessees to recognize virtually all leases on the balance sheet as right-of-use assets and lease liabilities.
Why it matters
ASC 842 fundamentally changed lease accounting in the United States. Before ASC 842, operating leases were off-balance-sheet. companies could have billions in lease obligations invisible to investors. The standard brought transparency by requiring nearly all leases onto the balance sheet, affecting financial ratios, debt covenants, and capital allocation decisions.
The standard applies to virtually every company reporting under US GAAP, from Fortune 500 enterprises to private companies. Compliance requires identifying all lease arrangements, calculating present values, determining classification, and maintaining ongoing measurement throughout the lease term.
How Arvexi handles this
Arvexi provides complete ASC 842 compliance out of the box. The platform handles lease classification, initial measurement, subsequent measurement, modifications, remeasurements, and disclosure generation. AI extracts lease terms from documents, calculates ROU assets and lease liabilities, generates journal entries, and produces ASC 842 disclosure checklists.