Planning for New Lease Accounting Standards

With the effective date of the Financial Accounting Standards Board’s new lease standard quickly approaching, virtually all companies will be required to evaluate the potentially significant impact of the standard on their individual financial reporting posture.

Set to take effect Jan. 1, 2020 for calendar year-end nonpublic entities, ASC 842 requires lessees to recognize an asset and liability on their balance sheet for all leases with terms greater than 12 months, including operating leases. The new standard introduces an additional level of complexity with the changes in the definition of a lease: Certain arrangements previously considered leases may no longer be accounted for while others, such as implicit leases, are being reevaluated to determine if they qualify.

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This article is partially reprinted here with permission from Middle Market Growth.