easy · Investment Banking accounting
Under modern lease accounting (ASC 842), what is the primary impact of an operating lease on the balance sheet?
- Recognition of only a contingent liability noted in the lease footnotes
- A direct, immediate reduction to retained earnings recorded at lease inception
- Recognition of both a Right-of-Use (ROU) Asset and a corresponding Lease Liability
- Operating leases are instead treated as equity investments the lessee holds in the lessor entity
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