With data from the CompanyIQ^® SEC EDGAR Comment Letters search tool, this report from LeaseAccelerator is a study of SEC staff comments issued for the new lease standard, Leases (Topic 842) also known as ASC 842, in the first 10 months of 2019. Topic 842 was adopted by most calendar year-end public business entities (PBEs) in the interim first quarter of 2019 and, for many, was the most significant new accounting standard adopted in 2019.

Overall, Topic 842 is one of the most significant new accounting changes in decades. An analysis of the financial disclosures of S&P 500 companies following the first quarter of adoption showed that most issuers brought a material amount of new right-of-use (ROU) assets and corresponding operating lease liabilities onto their balance sheet.1 The adoption effort for many issuers necessitated a significant implementation process requiring the migration of hundreds, and sometimes thousands, of leases onto new systems with new controls, processes, and procedures. Although the sheer volume and magnitude of this feat may have been daunting, many issuers discovered one of the most significant challenges, both upon and post-adoption, related to the standard’s accounting complexity and new disclosures reporting.