# ASC 842-50-S99: Leases — Leveraged Lease Arrangements — SEC 99 SEC Materials

Source: FASB Accounting Standards Codification, Basic View

[Read online](https://asc.understandingaccounting.org/asc/842/50/#sec-99-sec-materials)

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.

Tables and mathematical or amendment markup are retained as HTML where Markdown would lose structure.

Source downloaded (UTC): 2026-09-10T01:58:37.823Z to 2026-09-10T01:58:37.823Z

Record version: sha256:d60fdb789b4ab9c804c9ecc0e0953590f2a0b23d49e6245035734a93c0d097e6

Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f

Effective as of: not established by retrieval timestamps.


## ASC 842-50-S99: SEC 99 SEC Materials

[Read section](https://asc.understandingaccounting.org/asc/842/50/#sec-99-sec-materials)

SEC content: yes

#### SEC Staff Guidance

##### [842-50-S99-1](https://asc.understandingaccounting.org/asc/842/50/#842-50-S99-1)

Pending content: no

Source downloaded (UTC): 2026-09-10T01:58:37.823Z to 2026-09-10T01:58:37.823Z

Record version: sha256:b74ceca5e9fd4f2bc8a1057edf93f2271d6815bb0230418dca12c8da18abd445

Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f

Effective as of: not established by retrieval timestamps.


The following is the text of SEC Observer Comment: Effect of a Change in Tax Law or Rates on Leveraged Leases.

-   Section 842-50-35 requires that all components of a leveraged lease be recalculated from inception of the lease based on the revised after-tax cash flows arising from the change in the tax law, including revised tax rates. The difference between the amounts originally recorded and the recalculated amounts must be included in income of the year in which the tax law is enacted.
    
-   This accounting may have distortive effects on the ratio of earnings to fixed charges ("the ratio") as calculated. For example, a favorable after-tax effect might consist of an unfavorable adjustment to pretax income that is more than offset by a favorable adjustment to income tax expense. In those circumstances, despite the overall favorable effect, the ratio as calculated pursuant to the applicable instructions to Item 503(d) of Regulation S-K would be affected negatively because the "earnings" component of the ratio is based on pretax income.
    
-   In filings with the Commission the SEC staff will expect the cumulative effect on pretax income and income tax expense, if material, to be reported as separate line items in the income statement. SEC staff will not object to exclusion of an unfavorable pretax adjustment from the "earnings" component of the ratio, in cases in which the after-tax effect is favorable, provided that (1) such exclusion is adequately identified and explained in connection with all disclosures and discussions relating to the ratio and (2) supplemental disclosure is made of the ratio as calculated in accordance with the applicable instructions.