ASC 840 refers to which accounting standard?

ASC 840 refers to which accounting standard?

• A. Accounting Standards Codification 940
• B. American Standards Codification 840
• C. Accounting Standards Codification 840
• D. Auditing Standards Codification 840

Answer: (C)

The main idea here is knowing what ASC 840 refers to within US GAAP. ASC stands for Accounting Standards Codification, the single official source for US GAAP. The number 840 designates the topic of leases, so ASC 840 is the lease accounting standard that was in effect before ASC 842. In other words, it’s the lease guidance under US GAAP that defined how lessees and lessors accounted for lease arrangements (including the old capital versus operating lease distinctions). The other options mix up the naming (American or Auditing) or point to a different codification, so they don’t describe the actual standard.

The main idea here is knowing what ASC 840 refers to within US GAAP. ASC stands for Accounting Standards Codification, the single official source for US GAAP. The number 840 designates the topic of leases, so ASC 840 is the lease accounting standard that was in effect before ASC 842. In other words, it’s the lease guidance under US GAAP that defined how lessees and lessors accounted for lease arrangements (including the old capital versus operating lease distinctions). The other options mix up the naming (American or Auditing) or point to a different codification, so they don’t describe the actual standard.