After years of preparation and deferrals, the final effective date of the FASB’s new lease accounting standard is now imminent for private companies. For those that have yet to adopt, here are some valuable observations.
The new lease accounting standard from the Financial Accounting Standards Board (FASB), Accounting Standards Codification (ASC) Topic 842, “Leases,” requires organizations to record most leases on their balance sheets. Public companies and early adopting private clients have implemented the standard, and now it’s time for private companies to follow suit. As with any major standard adoption, many factors should be considered and assessed, including the lessee’s discount rate, embedded leases, software tools to assist with tracking and accounting for leases, and process changes. The experiences of adopters have revealed several important lessons and key takeaways about adopting and applying this complex lease accounting standard.
Here are 10 observations that might benefit private companies as they embark on adopting the standard.