The Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2016-15, Leases (Topic 842) in 2016. This purpose of this ASU is to increase transparency and comparability among entities by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements.
The following organizations need to adopt the new lease standards on January 1, 2019 for the year ending December 31, 2019:
- Public business entities
- Not-for-profit entities with “public bonds”
All other entities will need to adopt the new standards on January 1, 2020 (for year ending December 31, 2020).
Manufacturing.net recently posted an article regarding what manufacturers need to know now regarding these lease accounting changes considering the effective dates are on the horizon. You can read the article here.
Implementation of this new accounting standard will not happen overnight. You should have a plan in place now to ensure timely implementation of the new lease accounting standard. We can assist by educating you on the changes, assessing the accounting impact of your existing leases, and providing guidance on how future leases will influence your financial statements.