ASC 840-20
Operating Leases
840 Leases
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ASC 840-20 formerly contained the legacy accounting for operating leases by lessees and lessors, but every paragraph in the subtopic has been superseded and it now carries no operative guidance. The bulk of the supersessions were made by ASU 2016-02, which replaced Topic 840 with Topic 842, while two derecognition paragraphs (840-20-40-3 and 840-20-40-4) were superseded by ASU 2014-09 on revenue. Readers seeking current operating lease rules must consult Topic 842.
Key points (5)
- Every paragraph of ASC 840-20 (Sections 05, 15, 25, 30, 35, 40, 45, 50, and 55) has been superseded, so the subtopic contains no operative guidance.
- The supersession was effected primarily by Accounting Standards Update No. 2016-02 (Leases), which replaced Topic 840 with Topic 842.
- Two derecognition paragraphs, 840-20-40-3 and 840-20-40-4, were superseded earlier by Accounting Standards Update No. 2014-09 (Revenue from Contracts with Customers), which moved that guidance into the revenue model.
- Because no substantive text remains, an entity applying current GAAP must look to Topic 842 for lessee and lessor operating lease recognition, measurement, presentation, and disclosure.
- Topic 840 guidance remains relevant only for understanding comparative periods presented under legacy GAAP or for entities analyzing transition adjustments under ASU 2016-02.
For students. Do not cite ASC 840-20 as authority — it is an empty shell of superseded paragraphs; the live rules for operating leases are in ASC 842 (with 842-20 for lessees and 842-30 for lessors). The common mistake is quoting old 840-20 concepts such as straight-line rent expense with no balance sheet asset or liability, which no longer reflects current GAAP.
Machine-generated study aid for ASC 840-20. Check the source paragraphs below.
840-20-00Status
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840-20-05Overview and Background
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Lessees
Lessors
840-20-15Scope and Scope Exceptions
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Lessees
Lessors
840-20-25Recognition
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Lessees
Lessors
840-20-30Initial Measurement
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Lessees
840-20-35Subsequent Measurement
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Lessees
Lessors
840-20-40Derecognition
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Lessees
Lessors
840-20-45Other Presentation Matters
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Lessees
Lessors
840-20-50Disclosure
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Lessees
Lessors
840-20-55Implementation Guidance and Illustrations
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