Finance Lease

ASC 842 journal entries trip up even experienced controllers. The initial recognition entry, the monthly operating lease expense, and the finance lease split between depreciation and interest all follow specific patterns. Here’s an ASC 842 lease accounting example with every entry you need, with real numbers.

Under ASC 842, every lease is either operating or finance — and the classification changes your income statement, cash flow, and audit disclosures. Here’s how to classify correctly and account for each type.