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FASB Lease Compliance

Helping with Changes in Lease Accounting and Reporting

In 2016, the Financial Accounting Standards Board (FASB) and International Accounting Standards Board (IASB) issued new accounting standards that affect how companies will report on their obligations for leased assets. The change affects all assets covered by a lease agreement, whether they are real estate assets or equipment assets. Everything from office space to copy machines must be accounted for at an asset level except in very limited circumstances.

This is a time-sensitive issue. The new accounting standards take effect for fiscal years beginning after December 15, 2018 for public companies and one year thereafter for private companies.

The most visible result of this accounting change is that new assets and liabilities will be reflected on a company’s financial statements. What previously were straight-line rent expenses that appeared on the income statement will now be reflected as assets, liabilities and expenses on both the balance sheet and income statement, shown at present value with interest factored in.

If you haven’t already started, now is the time. Scribcor can help you comply by advising you on all functions that touch leasing – from procurement to finance to operations to real estate and provide manpower, guidance and technical support to bolster your team.

Be careful and consider the makeup of your leased assets. Some portfolios contain primarily real estate assets. Some may be heavy into fleet, railcar, technology or other equipment. Each will have unique challenges that require unique solutions.

This issue requires a skilled partner to navigate this complex change and create a customized solution that works best for you. Whether you need assistance evaluating potential software solutions, gathering and entering data or abstracting leases, we are your ideal project partner.

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