Accounting

ASC 842

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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

ASC 606
GAAP revenue recognition standard for contracts with customers.
ASC 718
GAAP rules for expensing stock-based compensation.
Deferred Revenue
Cash received in advance of delivering the service.
Accrual vs. Cash Accounting
Accrual recognizes revenue/expense when earned; cash when money moves.

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