Overview:
Cradle prepares the disclosure required under ASC 842-20-50-6, which requires calculating the Maturity Analysis using the undiscounted cash flow.
What Does the Accounting Standard Say About the Treatment of Maturity Analysis?
According to ASC 842-20-50-6, “A lessee shall disclose a maturity analysis of its finance lease liabilities and its operating lease liabilities separately, showing the undiscounted cash flows on an annual basis for a minimum of each of the first five years and a total of the amounts for the remaining years. A lessee shall disclose a reconciliation of the undiscounted cash flows to the finance lease liabilities and operating lease liabilities recognized in the statement of financial position.”
How Does Cradle Prepare Maturity Analysis?
Cradle prepares a Maturity Analysis for the Disclosure Report. As required by ASC 842, it breaks down the contractual undiscounted cash flows and calculates the total undiscounted lease liabilities by a 10-year time band which meets the requirements laid out in ASC 842-20-50-6
FAQs:
Why does the maturity analysis total not equal the total lease liability amount in Cradle? The total lease liability amount on the balance sheet and disclosure are the discounted lease liability. In contrast, the amounts on the maturity analysis represent the undiscounted lease liability.
Further Reading: