New standard likely to require significant changes in accounting for organizations that rely on leases for facilities, equipment, vehicles, etc.
On February 25th, 2016 the U.S. Financial Accounting Standards Board (FASB) concluded a decade of study and discussion of needed changes to lease accounting guidance through its issuance of ASC 842. The new standard will require organizations reporting under US GAAP to recognize most leases on their balance sheets.
ASC 842’s issuance marks a milestone in the joint effort between FASB and the International Accounting Standards Board (IASB) to create greater convergence between US GAAP and IFRS in the interest of global financial reporting transparency. The new IFRS standard on leases was issued in January. While the IFRS standard and ASC 842 are not identical, many of the critical areas of former difference between the two standards have been resolved.
ASC 842 requires on balance sheet reporting of leases that are 12 months or longer in duration, increasing both reported assets and liabilities. The change will have broad impacts extending from accounting and financial reporting to tax implications, legal and contract changes, real estate and facilities considerations, budgeting, contract management, and much more. While adoption is not required until periods beginning after December 15, 2018 for public companies and a year later for private entities, the changes are so far reaching that experts agree most companies will need several years to prepare—and should begin that process now.
Nationally known A&A trainer and Surgent course author and presenter Jennifer Louis, CPA has been following developments in lease accounting throughout the standard setting process and on March 14th, 2016 will present a fully updated CPE program on the issue, entitled Lease Accounting: The Impact of Changing Standards on Both Lessors and Lessees (AAAL). This two-hour webinar will provide preparers, issuers and auditors of GAAP financial statements with the grounding they need in the new standard. It will be particularly useful for CPAs working within corporate environments looking to understand the new requirements to begin proactive planning for implementation readiness, and for CPAs in public practice who provide consulting services to entities preparing to implement the new standard. Don’t miss this opportunity to begin preparing for this historic change in US GAAP accounting and to have your questions answered live.