{"schema_version":2,"canonical_url":"https://asc.understandingaccounting.org/asc/842/20/#25-recognition","source":"FASB Accounting Standards Codification, Basic View","usage":"Study and research edition. Verify current requirements with the official source. Summaries, enrichment, and tags are machine-generated study aids. Paragraph html preserves source markup; snippet is abbreviated. Pending content is not necessarily effective.","topic":"842","topic_title":"Leases","subtopic":"842-20","subtopic_title":"Lessee","section":{"number":"25","label":"25 Recognition","anchor":"25-recognition","is_sec":false,"groups":[{"block":null,"heading":null,"paragraphs":[{"citation":"842-20-25-1","para":"25-1","html":"
At the commencement date, a lessee shall recognize a right-of-use asset and a lease liability.
","snippet":"At the commencement date, a lessee shall recognize a right-of-use asset and a lease liability.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:ef3d7f440b1af531f868b9e8d2ebe9124cbdaa3d5414aa83746417c178198722","downloaded_from":"2026-09-10T01:56:38.192Z","last_downloaded_at":"2026-09-10T01:56:38.192Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479365","source_sha256":"034f99fc778f91d6f01ea7dbcfe5bd8b5b741e42473b822ebb2fff6baa7bb112"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:c76990a4a5cb53c23b2c644cc0e55004be41247ef5a1f7d4203275609796d722","downloaded_from":"2026-09-10T01:56:38.192Z","last_downloaded_at":"2026-09-10T01:56:38.192Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479365","source_sha256":"034f99fc778f91d6f01ea7dbcfe5bd8b5b741e42473b822ebb2fff6baa7bb112"}},{"block":null,"heading":"Short-Term Leases","paragraphs":[{"citation":"842-20-25-2","para":"25-2","html":"
As an accounting policy, a lessee may elect not to apply the recognition requirements in this Subtopic to short-term leases. Instead, a lessee may recognize the lease payments in profit or loss on a straight-line basis over the lease term and variable lease payments in the period in which the obligation for those payments is incurred (consistent with paragraphs
842-20-55-1 through 55-2
). The accounting policy election for short-term leases shall be made by class of underlying asset to which the right of use relates.
","snippet":"As an accounting policy, a lessee may elect not to apply the recognition requirements in this Subtopic to short-term leases. Instead, a lessee may recognize the lease payments in profit or loss on a straight-line basis o…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:9014aa9c1f9fa325b0d9d486c57aac8c6ec2f04666bc3d5531d8564d0fa5b757","downloaded_from":"2026-09-10T01:56:38.192Z","last_downloaded_at":"2026-09-10T01:56:38.192Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479365","source_sha256":"034f99fc778f91d6f01ea7dbcfe5bd8b5b741e42473b822ebb2fff6baa7bb112"}},{"citation":"842-20-25-3","para":"25-3","html":"
If the lease term or the assessment of a lessee option to purchase the underlying asset changes such that, after the change, the remaining lease term extends more than 12 months from the end of the previously determined lease term or the lessee is reasonably certain to exercise its option to purchase the underlying asset, the lease no longer meets the definition of a short-term lease and the lessee shall apply the remainder of the guidance in this Topic as if the date of the change in circumstances is the commencement date.
","snippet":"If the lease term or the assessment of a lessee option to purchase the underlying asset changes such that, after the change, the remaining lease term extends more than 12 months from the end of the previously determined …","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:b27e44885dd33d3b55f6e9e7a70b2a26a49709a33cbbb9573ad13d8b7a1f740c","downloaded_from":"2026-09-10T01:56:38.192Z","last_downloaded_at":"2026-09-10T01:56:38.192Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479365","source_sha256":"034f99fc778f91d6f01ea7dbcfe5bd8b5b741e42473b822ebb2fff6baa7bb112"}},{"citation":"842-20-25-4","para":"25-4","html":"
See Example 1 (paragraphs
842-20-55-13 through 55-16
) for an illustration of the requirements on short-term leases.
","snippet":"See Example 1 (paragraphs 842-20-55-13 through 55-16) for an illustration of the requirements on short-term leases.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:93b38f2f3e8a884662a329007c1fae114679e00ef1cdb76a9ffa7e7eaad2cb95","downloaded_from":"2026-09-10T01:56:38.192Z","last_downloaded_at":"2026-09-10T01:56:38.192Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479365","source_sha256":"034f99fc778f91d6f01ea7dbcfe5bd8b5b741e42473b822ebb2fff6baa7bb112"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:c94ed633fc19fd83b879f83922378bd79976d419b783bb72874d299496ae2245","downloaded_from":"2026-09-10T01:56:38.192Z","last_downloaded_at":"2026-09-10T01:56:38.192Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479365","source_sha256":"034f99fc778f91d6f01ea7dbcfe5bd8b5b741e42473b822ebb2fff6baa7bb112"}},{"block":null,"heading":"Finance Leases","paragraphs":[{"citation":"842-20-25-5","para":"25-5","html":"
After the commencement date, a lessee shall recognize in profit or loss, unless the costs are included in the carrying amount of another asset in accordance with other Topics:
  1. a
    Amortization of the right-of-use asset and interest on the lease liability
  2. b
    Variable lease payments not included in the lease liability in the period in which the obligation for those payments is incurred (see paragraphs
    842-20-55-1 through 55-2
    )
  3. c
    Any impairment of the right-of-use asset determined in accordance with paragraph 842-20-35-9.
","snippet":"After the commencement date, a lessee shall recognize in profit or loss, unless the costs are included in the carrying amount of another asset in accordance with other Topics:\n(a) Amortization of the right-of-use asset a…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:a7b260a0fb8a45dd261229a6cf0172fca0c1b198367cefa6fd464bca60ed1740","downloaded_from":"2026-09-10T01:56:38.192Z","last_downloaded_at":"2026-09-10T01:56:38.192Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479365","source_sha256":"034f99fc778f91d6f01ea7dbcfe5bd8b5b741e42473b822ebb2fff6baa7bb112"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:0a9e6cda1ebe92ed459227533b5fb8f295fc758e7d5b74e58f10aea49f3602f2","downloaded_from":"2026-09-10T01:56:38.192Z","last_downloaded_at":"2026-09-10T01:56:38.192Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479365","source_sha256":"034f99fc778f91d6f01ea7dbcfe5bd8b5b741e42473b822ebb2fff6baa7bb112"}},{"block":null,"heading":"Operating Leases","paragraphs":[{"citation":"842-20-25-6","para":"25-6","html":"
After the commencement date, a lessee shall recognize all of the following in profit or loss, unless the costs are included in the carrying amount of another asset in accordance with other Topics:
  1. a
    A single lease cost, calculated so that the remaining cost of the lease (as described in paragraph 842-20-25-8) is allocated over the remaining lease term on a straight-line basis unless another systematic and rational basis is more representative of the pattern in which benefit is expected to be derived from the right to use the underlying asset (see paragraph 842-20-55-3), unless the right-of-use asset has been impaired in accordance with paragraph 842-20-35-9, in which case the single lease cost is calculated in accordance with paragraph 842-20-25-7
  2. b
    Variable lease payments not included in the lease liability in the period in which the obligation for those payments is incurred (see paragraphs
    842-20-55-1 through 55-2
    )
  3. c
    Any impairment of the right-of-use asset determined in accordance with paragraph 842-20-35-9.
","snippet":"After the commencement date, a lessee shall recognize all of the following in profit or loss, unless the costs are included in the carrying amount of another asset in accordance with other Topics:\n(a) A single lease cost…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:cf52d49ee71aaa210cc3ad0500583574ff23bec1afb9fd534f537311dee14c39","downloaded_from":"2026-09-10T01:56:38.192Z","last_downloaded_at":"2026-09-10T01:56:38.192Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479365","source_sha256":"034f99fc778f91d6f01ea7dbcfe5bd8b5b741e42473b822ebb2fff6baa7bb112"}},{"citation":"842-20-25-7","para":"25-7","html":"
After a right-of-use asset has been impaired in accordance with paragraph 842-20-35-9, the single lease cost described in paragraph 842-20-25-6(a) shall be calculated as the sum of the following:
  1. a
    Amortization of the remaining balance of the right-of-use asset after the impairment on a straight-line basis, unless another systematic basis is more representative of the pattern in which the lessee expects to consume the remaining economic benefits from its right to use the underlying asset
  2. b
    Accretion of the lease liability, determined for each remaining period during the lease term as the amount that produces a constant periodic discount rate on the remaining balance of the liability.
","snippet":"After a right-of-use asset has been impaired in accordance with paragraph 842-20-35-9, the single lease cost described in paragraph 842-20-25-6(a) shall be calculated as the sum of the following:\n(a) Amortization of the …","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:44a011a9c30128e630f01173326dd8605fdaa08d1e4c40fe7a1cdf898531460e","downloaded_from":"2026-09-10T01:56:38.192Z","last_downloaded_at":"2026-09-10T01:56:38.192Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479365","source_sha256":"034f99fc778f91d6f01ea7dbcfe5bd8b5b741e42473b822ebb2fff6baa7bb112"}},{"citation":"842-20-25-8","para":"25-8","html":"
Throughout the lease term, the remaining cost of an operating lease for which the right-of-use asset has not been impaired consists of the following:
  1. a
    The total lease payments (including those paid and those not yet paid), reflecting any adjustment to that total amount resulting from either a remeasurement in accordance with paragraphs
    842-10-35-4 through 35-5
    or a lease modification; plus
  2. b
    The total initial direct costs attributable to the lease; minus
  3. c
    The periodic lease cost recognized in prior periods.
","snippet":"Throughout the lease term, the remaining cost of an operating lease for which the right-of-use asset has not been impaired consists of the following:\n(a) The total lease payments (including those paid and those not yet p…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:140f84f80149153255ba53ff121900f3f4ce1d03a228fb7a567ac2b5e5c89e04","downloaded_from":"2026-09-10T01:56:38.192Z","last_downloaded_at":"2026-09-10T01:56:38.192Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479365","source_sha256":"034f99fc778f91d6f01ea7dbcfe5bd8b5b741e42473b822ebb2fff6baa7bb112"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:90099ebc65d09dfc9a7e8ca3fdc59e708192b8a47127c334715fd7c63f96a028","downloaded_from":"2026-09-10T01:56:38.192Z","last_downloaded_at":"2026-09-10T01:56:38.192Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479365","source_sha256":"034f99fc778f91d6f01ea7dbcfe5bd8b5b741e42473b822ebb2fff6baa7bb112"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:5499017552d3b6fbd32a146c420d3e2ed3ede345043089c88e5dc188fcb2125b","downloaded_from":"2026-09-10T01:56:38.192Z","last_downloaded_at":"2026-09-10T01:56:38.192Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479365","source_sha256":"034f99fc778f91d6f01ea7dbcfe5bd8b5b741e42473b822ebb2fff6baa7bb112"}},"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:5499017552d3b6fbd32a146c420d3e2ed3ede345043089c88e5dc188fcb2125b","downloaded_from":"2026-09-10T01:56:38.192Z","last_downloaded_at":"2026-09-10T01:56:38.192Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479365","source_sha256":"034f99fc778f91d6f01ea7dbcfe5bd8b5b741e42473b822ebb2fff6baa7bb112"}}