Senior-level Accounting and Finance Professionals on a Project and Interim Basis

Contact Us
Minneapolis 952.345.4140
Dallas 972.720.1020

How the New Lease Accounting Standard Will Impact Businesses

How the New Lease Accounting Standard Will Impact Businesses

Author: Thomas Vick/Tuesday, May 22, 2018/Categories: SNI Companies, SNI Financial, Financial Staffing, Industry Trends, SNI Certes, Financial Staffing, Industry Trends, Accounting Now

Rate this article:
4.4

In early 2016, the International Accounting Standards Board (IASB) and the Financial Accounting Standards Board (FASB) issued their new lease accounting standard, taking effect January 1, 2019. Before reading any further, let’s address the first question: what is the new lease accounting standard? In short, this standard will require organizations, public and private, to be more transparent about their lease-related assets and liabilities, also disclosing all leases greater than 12 months as liabilities on their balance sheets.

Currently, there are two types of leases – operating and capital. Operating leases are only recorded on the Income Statement as rent expense, whereas the liability and related asset for capital leases are reflected on the Balance Sheet. Until recently, companies were not obligated to record all leases as capital and only disclose operating leases in a footnote.

At the end of this year, any lease with a life greater than 12 months must be recorded and disclosed as a capital lease. This change is impacting all businesses that engage in leased assets with the majority of that effort impacting finance, accounting and procurement departments. With many moving pieces on this new standard, here are two areas where companies should be focused in order to prepare for this change:

Track Every Asset
As mentioned, all leases are now to be recorded and treated as liabilities. For example, airlines now will need to list every plane and vehicle they use regardless of ownership. In order to get prepared for this shift, companies should start the reorganization of their lease information as soon as possible. The challenge is this is likely a much more complicated task than anticipated as organizations will need to capture a great deal more data than previously necessary for leases previously treated as operating leases. Luckily, there are analytical programs that have been updated and put in place to help retrieve data and remedy inconsistencies. Taking action here will put companies ahead of the game.

Identify Proper Systems
Once all lease information is reconciled and accurate, new systems should be put in place to ensure these efficiencies continue moving forward. There are emerging options for businesses to incorporate software solutions into the daily administration of leases, providing the accounting and finance managers with adequate resources needed for reporting. Additionally, most systems are designed to fulfill specific purposes, automatically preforming needed capabilities to comply with the new lease accounting requirements.

Print

Number of views (4348)/Comments (20)

Thomas Vick
Thomas Vick

Thomas Vick

Other posts by Thomas Vick
Contact author

20 comments on article "How the New Lease Accounting Standard Will Impact Businesses"

Avatar image

17tracking

5/31/2018 1:17 AM

You can track your global package through official site of 17tracking


Avatar image

Essay Writing Help

6/1/2018 4:34 AM

To many business owners and official administration groups this is anything but a notable disclosure. The Financial Accounting issued far reaching developments in how organizations perceive resources and liabilities that emerge from lease arrangements.



Avatar image

gift

10/12/2018 2:32 AM

cool


Avatar image

free gift code

10/12/2018 2:32 AM

cool




Avatar image

RentiPad

2/18/2019 10:46 PM

Business is tremendously important to a country's economy for the reason that businesses provide both properties and services and jobs. ... Businesses are also the resources by which numerous people get their jobs. Businesses create job chances because they need people to crop and sell their goods and services to customers.


Avatar image

andymark

5/1/2019 12:44 AM

Thanks for commenting, and I’m glad you enjoyed the post!

Visit games.lol for PC Games Download


Avatar image

[url=https://games.lol/]PC Games Download [/url]

5/1/2019 12:45 AM

Thanks for sharing, this is a fantastic post.Thanks Again. Great.


Avatar image

andymark

5/1/2019 12:46 AM

The information you have very true and useful, thank you have shared this post.

Game Lover - https://games.lol/


Avatar image

PC Games Download

5/1/2019 12:50 AM

I like your post.Very informative nice written.Thanks for the information.



Avatar image

Buy Indian Handicrafts Online

7/6/2019 6:01 AM

https://www.gergstore.com

Gergstore - Online Shopping India

https://uthhan.gergstore.com

Buy handicrafts online in India

https://www.goldenerasoftware.com

Golden Era Software Solutions

https://www.goldeneraproperty.com

Farmland in Bangalore


Avatar image

Mike

7/24/2019 1:46 AM

nice post.


Avatar image

Android Parental Control App

7/26/2019 2:34 AM

Great Article. I just love the way you write this article. Thank you for sharing this informative post with us. Read this: http://www.quay-vennards.com/uses-and-benefits-of-bit-guardian-parental-control-app/


Avatar image

stacy

8/27/2019 5:02 AM

This article talks about the various and weird spending habits of all the zodiac signs and to add to it here is an interesting article on the same 12 Things Your Online Horoscope Says About Your Money Habits


Avatar image

example

10/15/2019 2:18 AM

hello everyone


Avatar image

A

10/15/2019 2:20 AM

Dear Author, thank you for sharing the useful and informative information. I am regularly read your articles and i love your writing skills. I am a blogger, writing on different - different topics. Here my recent posted article, please check - Write My Assignment.


Leave a comment

This form collects your name, email, IP address and content so that we can keep track of the comments placed on the website. For more info check our Privacy Policy and Terms Of Use where you will get more info on where, how and why we store your data.
Add comment

Contact author

x
Subscribe to Our RSS Feeds!