Practical Expedients
Category
ASC 842
Practical expedients are simplification options provided by ASC 842 and IFRS 16 that reduce the effort required for lease accounting adoption and ongoing compliance. They include the package of practical expedients (no reassessment of expired/existing leases), the hindsight expedient, and the option to not separate lease and non-lease components.
Why it matters
Practical expedients can dramatically reduce the work required for ASC 842 adoption. The package of practical expedients alone eliminates the need to reassess whether existing contracts contain leases, the classification of existing leases, and whether initial direct costs qualify for capitalization. However, each expedient must be elected consistently and disclosed. auditors scrutinize expedient elections closely.
How Arvexi handles this
Arvexi tracks which practical expedients each organization has elected and applies them consistently across the portfolio. The platform enforces election-level consistency, prevents contradictory elections, and generates the required disclosures listing all elected expedients and their financial impact.