ASC 842 (Leases)

Definition

The US GAAP standard on lease accounting that, like IFRS 16, requires lessees to recognise right-of-use assets and lease liabilities for most leases. ASC 842 retains a distinction between operating leases (straight-line expense) and finance leases (front-loaded expense) on the income statement, unlike IFRS 16 which treats all leases similarly. The standard affects financial ratio analysis, debt covenants, and valuation adjustments for companies with significant lease obligations.