FASB Issues Long-Awaited Standard on Lease Accounting
On February 25, the Financial Accounting Standards Board (FASB) published its long-awaited standard on lease accounting. Accounting Standards Update No. 2016-02, Leases (Topic 842), concludes a project that has taken more than a decade to complete. It comes about six weeks after the International Accounting Standards Board issued its updated standard on lease accounting.
The new guidance on reporting leases under U.S. Generally Accepted Accounting Principles has been the subject of intense public scrutiny. It’s received significant opposition from businesses that expect to add many billions of dollars in assets and liabilities to their balance sheets once the lease accounting standard becomes effective.
In fact, the U.S. Chamber of Commerce and other business groups recently requested that the FASB give private companies an exemption from the standard’s requirements because of the costs they would bear and the operational difficulties they would face implementing the changes. The updated guidance, however, provides no such exception for private companies.
On the bright side, for public companies, the new standard goes into effect for annual periods that begin after December 15, 2018. In other words, compliance would start in 2019 for calendar-year public entities. Private companies would have an extra year to comply.
Have questions about how the new standard impacts your company? Contact Dan Ward, Principal, Audit Services, at firstname.lastname@example.org or 314.983.1237.