Do the new lease accounting standards apply to your company? In almost every case, the short answer to that question will be yes. The long answer involves taking a closer look at your contracts.
But, first, exactly which new leasing standards are we talking about? There are three standard-setting accounting boards: the International Accounting Standards Board (IASB), the Governmental Accounting Standards Board (GASB), and the Financial Accounting Standards Board (FASB). Each develops guidance on financial reporting for specific types of entities.
Which standard you need to comply with depends on what type of organization you are. Entities with leasing activities that fall under more than one board’s jurisdiction, will need to report according to the guidelines set forth by each board concerned.
If you’re in the beginning or middle stages of ASC 842 implementation, you may be wondering how to proceed right now. The coronavirus pandemic has hurled economic uncertainty with shared concerns for our health and well-being through astounding obstacles of global shutdowns.
Private companies were already facing a myriad of challenges to reach compliance in time. As of April 8, however, this financial turmoil has spurred FASB to extend the deadline until 2022. However, considering our currently unprecedented complications, the additional layer of a mandated implementation processes has proved paralyzing.
Witnessing that many lessees and lessors may need to modify leases as a result of the international crisis, FASB voted unanimously to delay the effective dates for its standards on lease accounting and revenue recognition for certain entities, due to the difficulties presented by COVID-19. However, the deadline for compliance will still be fast approaching and continuing with your implementation strategy is essential.
Yes, Accountants, there is a place for spreadsheets in your ASC 842 implementation process.
For some, that bit of news is as welcome as Virginia being assured there is a Santa Claus. Especially with all the headlines declaring lease accounting software as the one and only answer to the challenges of implementing the new lease accounting standards. One article flat out claims the days of using Excel are over!
It’s easy to see why spreadsheets are so beloved. They’re inexpensive, versatile and have been around for ages.
But it’s also understandable that many implementers gave up on spreadsheets in favor of an automated solution. In fact, 72% of public companies that have finished implementation either upgraded an existing system or purchased new lease accounting software. Early on, they realized the magnitude, complexity and significance of the task before them.