What is ASC 840 in real estate?

What is ASC 840?

ASC 840 used to be the accounting standard for commercial leases. It let companies disclose their leases only in the notes of their financial statements rather than in financial statements themselves, making it difficult for investors to understand a company's true financial obligations. In 2016, FASB issued a new leasing standard, ASC 842, that now requires that both operating and finance leases be recognized on the balance sheet. This change provides a more accurate representation of a company's financial commitments and liabilities.