Home Technology Innovations, Inc.: Transitioning to the new leasing standard. (December 2019)

• Record Type: Journal Article
• Authors: Gray, David L.; Daly, Abbie L.
• Is Part Of: Journal of accounting education. Volume 49(2019)
• Publication Date: 2019-12
• Subjects: New leasing standard -- Lease case study -- Economic consequences of accounting standards -- Lease accounting research; Accounting -- Study and teaching -- Periodicals; Accounting -- Study and teaching -- United States -- Periodicals; Comptabilité -- Étude et enseignement -- Périodiques; Comptabilité -- États-Unis -- Étude et enseignement -- Périodiques; 657.0711
• DOI: 10.1016/j.jaccedu.2019.100636
• Languages: English
• ISSNs: 0748-5751

Abstract

Highlights: Focuses on key implementation issues associated with the new leasing standard. Considers financial and broader management impacts stemming from the new leasing standard. Presents a modular case with broad applicability and adaptability depending on objectives. Addresses lease standard complexities, such as lease renewal options, rent holidays, and escalation clauses. Addresses key differences between U.S. GAAP and IFRS for new leasing standard. Abstract: This case entails determining the expected financial statement impacts and related reporting requirements associated with the newly-promulgated leasing standard. The dataset includes financial statements, disclosures, and related supporting data for Home Technology Innovations, Inc. (a fictional, privately-held firm). You will determine financial statement effects of capitalizing existing operating lease obligations, evaluate the likelihood of exercising lease renewal options and calculate the impacts on lease capitalization calculations, research and prepare journal entries necessary to transition to the new leasing standards under both U.S. GAAP and IFRS, research and analyze the accounting for lease complexities, and apply broader business concepts in making recommendations. Instructors can select from combinations of case requirements so that the case can be used in financial accounting courses from the intermediate through the graduate level.