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How has ASC 842 changed lease accounting and what does it mean for valuation?

Answer

ASC 842 (effective 2019 for public, 2022 for private) requires companies to capitalize operating leases on the balance sheet — a right-of-use (ROU) asset and a corresponding lease liability for the present value of remaining payments. Previously, operating leases were off-balance-sheet, with only rent expense flowing through the IS.

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operating leasesASC 842

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