1. Pre-write: Analyze the message you received from your manager and decide how to respond. It will help to have a brief outline of what you want to include. You may use ChatGPT for this assignment, but you will need to submit an outline with your lease information as part of your prompt to ChatGPT. Otherwise ,ChatGPT cannot be relied on; that is, it will make up information.

To: xx From:Marge OReilly-Allen (oreillyallen@rider.edu) Subject:Research for Potential Client

xx,

I will be meeting with the CEO of a privately held company to propose our audit services and, hopefully, compliance solutions for the new lease standard (ASC 842). From a conversation with the CEO, I know the company has a significant number of service contracts and, I suspect, many of the contracts may have embedded leases. I have not worked on private company clients since ASC-842 and I will need some background information for the client presentation.

Action Requests: Please send me a2-3 page single spaced reportproviding:

• an overview of key points about ASC 842
• lessons learned from public company implementation
• implementation date for private companies and why it is differs from the implementation date for public companies

I will also need to know ASC 842's definition of a lease including the concept of identifiable assets and control, any bright line' requirements to determine lease classification, date used to determine if a contract is a lease and key disclosure requirements.

Lastly, I included a fact pattern for one of the client's typical service contract. Please let me know if it meets the criteria for an embedded lease and, if so, whether the client must use their incremental borrowing rate to record the lease on the balance sheet.

I will need this report by the end of the week. Since the client is the lessee, focus on lessee accounting for leases under ASC 842.

Fact Pattern for Embedded Leases:

The client has a security services contract with ABC Security. ABC Security provides cameras, monitors, and keypads for the client's facilities. The contract states that the client will have full usage of ABC Securitys monitoring equipment. The contract lists each item, along with an identification number, that will be used for this contract.

The client will have full control over the monitoring equipment, and will obtain substantially all of the economic benefits of the security equipment.

If you have any question, email me or set up a Zoom call.

Marge