General Articles

FASB Issues New Guidance on Lease Accounting

By March 1, 2016 No Comments

On February 25, 2016 FASB issued an Accounting Standard Update with the hopes of improving reporting related to lease transactions.  In addition the intent was to bring U.S. Generally Accepted Accounting Principles closer to the existing reporting treatment of lease transactions as set by International Accounting Standards Board.

Under this new guidance leases with terms of greater than 12 months will be required to be recognized as both an asset and liability of the company.   Previously only leases classified as capital leases required recognition of an asset and liability.

The standard takes effect for financial periods beginning after Dec. 15, 2018 for public companies and beginning after December 15, 2019 for other organizations.   Although these dates may seem to be far off in the future, many companies will need to be aware of how the lease transactions that they are currently engaged in (as well as the transactions they will enter into in the interim) will ultimately be reported in their financial statements.

To read the full referenced article, click here. For more information on financial reporting and the new standard issued by the FASB, please contact Ed Elsner at (231) 726-5848.