The Key Difference Between ASC 842 and SFAS No

question 20

Multiple Choice

The key difference between ASC 842 and SFAS No. 13 in accounting for leases by lessees is

• A) The recognition of a right‐to‐use asset (ROU) and lease liability on the statement of financial position for those leases previously classified as operating leases under SFAS No. 13
• B) Leases will be measured at their fair value by lessees
• C) The classification of a lease as a finance by a lessee is based on a completely new set of criteria than was used in SFAS No. 13.
• D) There are no major differences between the two standards in accounting for leases by lessees.

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Definitions:

Stabilize Earnings

Efforts or strategies used by businesses to maintain consistent and predictable profit levels despite market fluctuations.

Federal Outlays

Government spending funded by the federal budget, including spending on defense, education, public works, and social programs.

Social Security

A government program designed to provide financial support to retirees, disabled individuals, and beneficiaries in the event of death, ensuring a basic level of sustenance.

Medicare

A federal health insurance program in the United States primarily for people who are 65 or older, as well as for some younger people with disabilities.