Table of Contents
Background8
Basic Concepts of ASU 2016-0214
| General Rules | 14 |
| REVIEW QUESTIONS | 21 |
| SUGGESTED SOLUTIONS | 22 |
Introduction24
Definitions used in ASU 2016-0224
Scope and Scope Exceptions27
Identifying a Lease27
| REVIEW QUESTIONS | 56 |
| SUGGESTED SOLUTIONS | 58 |
Lessee Rules61
| Lease Classification - Lessee | 61 |
| Initial Measurement of Lease- Lessee | 71 |
| Lease Payments - Lessee | 83 |
| Lease Term and Purchase Options- Lessee | 93 |
| REVIEW QUESTIONS | 98 |
| SUGGESTED SOLUTIONS | 100 |
| Short-Term Leases- Lessee | 103 |
| Subsequent Measurement and Accounting for Leases- Lessee | 123 |
| Other Recognition and Measurement Issues- Lessees | 130 |
| Lease Modifications - Lessee | 141 |
| Subsequent Reassessment of Lease Elements- Lessee | 147 |
| Financial Statement Presentation Matters- Lessee | 151 |
| Disclosures by Lessees | 153 |
| REVIEW QUESTIONS | 181 |
| SUGGESTED SOLUTIONS | 183 |
Lessor Rules186
| Lease Classification | 186 |
| Amendments made to Lessor Rules since ASU 2016-02 | 196 |
| Accounting for Sales-Type Lease- Lessor | 199 |
| Accounting for a Direct Financing Lease | 206 |
| Accounting for Operating Leases- Lessor | 210 |
| Disclosure- Lessor Leases | 217 |
| REVIEW QUESTIONS | 221 |
| SUGGESTED SOLUTIONS | 223 |
Transition and Effective Date Information225
| General- Existing Leases | 225 |
| Transition to New Lease Standard | 225 |
Leases: Sale and Leaseback Transactions240
Leases: Leveraged Lease Arrangements243
| REVIEW QUESTIONS | 244 |
| SUGGESTED SOLUTIONS | 245 |
Impact of Changes to Lease Accounting246
Impact of Lease Changes on Nonpublic Entities255
Other Considerations- Dealing with Financial Covenants257
Avoiding the New Lease Standard259
| REVIEW QUESTIONS | 274 |
| SUGGESTED SOLUTIONS | 276 |
Case Study for Implementation of ASU 2016-02278
GLOSSARY306
INDEX309
Course Details
Author: Steven C. Fustolo, CPA
Mr. Fustolo is a partner with the Boston CPA firm of James J. Fox & Company and Director of the National Tax Institute, Inc. He is a frequent lecturer and author of numerous tax and accounting issues affecting closely held businesses. An AICPA author, Mr. Fustolo’s articles are regularly featured in The Practical Accountant and other publications. He is the author of Practice Issues: Compilation and Review, Accounting and Auditing Reference Guide, Everything You Never Wanted to Know About GAAP, Enron: Fraud, Deception and the Aftermath, FASB Review for Industry, and FASB, SSARS and SAS Update and Review and numerous other books and manuals that have been published by Practitioners Publishing Company (PPC) and Commerce Clearing House (CCH). He is the recipient of several Outstanding Discussion Leader awards from many professional organizations including the New York and Florida Societies of CPAs. Mr. Fustolo’s course entitled FASB, SSARS and SAS Update and Review continues to receive accolades and is regarded as one of the top live CPE programs in the country today with ratings that average 4.91 on a scale of 5.0. He speaks regularly for professional groups including being a guest lecturer at the AICPA Advanced Accounting and Auditing Technical Symposium. Mr. Fustolo is the recipient of the Elijah Watts Sells Award (AICPA) and Silver Medal (Massachusetts) for scores received on the CPA Examination.
Publication/Revision Date: 1/19/2026
Course Exam Questions (online): 50 (multiple-choice)
Program Delivery Method: NASBA QAS Self-Study
Available Formats of Course Text: PDF only or PDF plus printed copy sent in the mail
Course Level, Prerequisites, and Advance Preparation Requirements
| License | Course Level | Prerequisites | Advance Preparation Requirements |
|---|
| CPA | Overview | None | None |
* This program is appropriate for professionals at all organizational levels.
Sponsor ID Numbers
National Registry of CPE Sponsors ID: 107615
State CPA Board Sponsor ID Numbers (where applicable)
Florida Division of Certified Public Accounting: 0004761
Hawaii Board of Public Accountancy: 14003
New York State Board for Public Accountancy: 002146
Ohio Accountancy Board: CPE .51 PSR
Pennsylvania State Board of Accountancy: PX178025
Texas State Board of Public Accountancy: 009349
Learning Objectives
As a result of studying the course material, you should be able to meet the objectives listed below:
- Recognize a key change made to GAAP by the new lease standard
- Identify a type of lease that exists for a lessee under ASU 2016-02
- Recall a type of lease for which the ASU 2016-02 rules do not apply
- Recognize some of the criteria that determine whether a contract is or is not a lease
- Identify some of the types of economic benefits a lessee can obtain from a leased asset
- Recognize a right that ASU 2016-02 states does not prevent a lessee from having the right to direct use of an identified asset
- Identify a threshold for a lease term to be considered a major part of an asset's remaining economic life
- Recognize who an entity might not want to use the risk-free rate to compute the present value of lease payments
- Identify how a lessee should account for initial direct costs
- Recognize items that are and are not components of a lease term
- Recall the method a lessee should use to record interest expense on a lease obligation
- Identify types of leases for a lessor
- Recognize the rate that a lessor should use in performing the 90% test for a direct financing lease
- Identify how an entity accounts for a common control lease arrangement under ASU 2023-01
- Recall how a lessor should initially account for initial direct costs for a lease in certain instances
- Identify how a lessor should account for lease payments received on the income statement for an operating lease
- Recall how a lessor should classify certain cash receipts on the statement of cash flows
- Recognize how certain existing leases are accounted for on the implementation date of ASU 2016-02
- Identify how deferred income taxes will be treated for lessees under ASU 2016-02
- Recall the potential impact that the new lease standard might have on a lessee's EBITDA and debt-equity ratios, and
- Recall the IRS rules as when an entity should and should not capitalize a lease for tax purposes.
