Accounting
ASC 842
Quick definition
GAAP standard requiring leases to be recognized on the balance sheet.
ASC 842 requires lessees to recognize a right-of-use asset and a lease liability on the balance sheet for most leases. Matters for startups with office space or equipment leases — surprises many founders their first audit.
Related accounting terms
Frequently asked questions
- What is ASC 842?
- ASC 842 requires lessees to recognize a right-of-use asset and a lease liability on the balance sheet for most leases. Matters for startups with office space or equipment leases — surprises many founders their first audit.
- Why is ASC 842 important for startups?
- ASC 842 is a accounting concept that matters for startup founders because it directly affects fundraising readiness, financial decision-making, or operational discipline at the stage where mistakes are expensive to undo. Founders who understand it have a meaningfully easier time in diligence, board meetings, and investor conversations.
- What category does ASC 842 belong to?
- ASC 842 is a Accounting term in the StartupCFO finance glossary — alongside other accounting concepts that founders, CFOs, and accountants use in daily startup operations and reporting.
- Where can I learn more about ASC 842?
- Beyond this definition, see the related accounting terms below, or explore StartupCFO's insights and tools that put ASC 842 in context. For specific situations, talk to a fractional CFO who can walk through your numbers.
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