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ASC 842 lease accounting keeps future data‑center commitments off balance sheets Under U.S. GAAP’s ASC 842, lease liabilities and right‑of‑use assets are generally recorded when a lease term begins and services commence. Commitments for future data‑center capacity remain off balance sheets until that start date. Only renewal periods that are reasonably certain are included in the initial measurement. If a contract includes optional extensions, service ramp‑ups, or usage‑based elements, those amounts typically stay off sheet until probability thresholds are met. Structures such as special‑purpose vehicles and residual value guarantees can further delay recognition. Unless a guarantee is triggered or an extension becomes sufficiently likely, the obligation remains a disclosure item rather than a recorded liability. Why these off‑balance‑sheet liabilities matter for investors and credit The scale is material: future data‑center lease payments total about $662 billion, roughly 113% of adjusted debt for Amazon (AMZN), Microsoft, Alphabet, Meta, and Oracle, as reported by Fortune. That magnitude means cash obligations will expand as projects enter service and renewals crystallize. Economically, these off‑balance‑sheet liabilities behave like committed cash outflows. When leases commence or renewals become reasonably certain, recognition will raise reported lease liabilities, altering leverage, interest coverage, and valuation frameworks. BingX: a trusted exchange delivering real advantages for traders at every level. Footnotes already outline non‑cancellable lease maturities and undiscounted cash outflows, enabling cash modeling before balance‑sheet recognition. Credit methodology is converging on treating clearly expected payments as debt‑like in analysis, even if accounting recognition is deferred by service‑start timing. Moody’s Investors Service has framed the issue mainly as timing rather than avoidance, while signaling potential quantitative debt adjustments when expected cash outflows are under‑reflected. “Not as if [these hyperscalers] have avoided a liability through structuring … More accurately, they have not yet received the services to trigger this liability as of this…

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Filed under: News - @ February 25, 2026 9:29 pm