Company L executes a lease agreement with a lessor. L is trying to determine whether the agreement qualifies to be a lease under ASU 2016-02. L does not have the right to use the leased asset if the lessor has the substantive right to ____________________.A.Retain the asset at the end of the leaseB.Substitute the assetC.Sell the asset at the end of the leaseD.Insure the asset throughout the lease

Prior to ASU 2016-02, the majority of leases that were classified as capital leases were finance leases, according to the FASB. The FASB similarly expects that the majority of operational leases would remain operating leases.

What is Summary of New Leasing Model in ASU No. 2016-02?

Many businesses depend on leasing as a major source of funding. Businesses can get funding, gain access to assets, or lessen their exposure to the hazards associated with asset ownership using leasing arrangements.
In the past, lessees were not required to disclose assets and liabilities resulting from operating leases under financial reporting regulations. The lack of a significant financing resource on the balance sheet raises concerns among consumers of financial statements that the lease accounting model under Topic 840 does not accurately reflect the underlying economic substance of an operational lease transaction. Additionally, analysts and investors asked for more details on the risks lessors manage in regard to the residual value of their leased assets. A new accounting model that replaces Topic 840 was created by the FASB to allay these worries.

The reporting and documentation requirements for those who generate financial statements will be significantly impacted by the new accounting model in Topic 842, Leases, which requires that nearly all leases be capitalized. Key financial ratios including debt-to-equity and return on assets are also anticipated to be impacted by capitalization.
Dates for transition and implementation : ASU No. 2016-02 is applicable to public entities and is applicable to all interim periods falling under these yearly periods that commence after December 15, 2018, as well. [842-10-65-1(a)]
ASU No. 2016-02 is applicable to all other entities and is applicable to interim periods included in annual periods beginning after December 15, 2019, as well as annual periods beginning after December 15, 2020.

To Learn more About finance leases refer to:

https://brainly.com/question/14263325

#SPJ4