Question

Under ASC 840, operating leases require note disclosure of minimum lease payments for the: Multiple Choice...

Under ASC 840, operating leases require note disclosure of minimum lease payments for the:

Multiple Choice

1. amount of annual rental payments for the next five years.

2. discounted present value of future lease payments for the total of the next five years and the aggregate thereafter.

3. undiscounted present value of total future lease payments.

4. future cash outflows for each of the next five years and the aggregate thereafter.

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Answer #1

Answer is option 4

4. future cash outflows for each of the next five years and the aggregate thereafter.

According to ASC 840, the disclosure simply includes the maturity schedule. This schedule includes future cash flows (Committed payments) of the next five years and the further payments are aggregated. There was no application of discount rates for operating leases. To overcome all these short-comings of ASC 840, the new lease standard ASC 842 is applied.

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