With the release and impending implementation of new lease guidance for both governments and private companies, organizations need to be prepared for a change in the way items are recorded.
FASB NEW LEASE ACCOUNTING STANDARD
What is the new lease accounting standard?
FASB’s new lease standard introduced major changes in the financial reporting related to lease arrangements. Known as ASC 842, FASB’s new lease accounting standard aims to:
- Streamline accounting for leases under GAAP rules
- Reduce the use of off-balance activities
- Improve transparency into the liabilities contained in lease arrangements
When does the new lease standard take place?
Due to COVID-19, the effective date of the lease accounting standard begins after December 15, 2021 for private companies and nonprofit organizations.
Click here to access our FASB Lease Standard Guide.
GASB LEASE ACCOUNTING STANDARD
What is GASB 87?
GASB 87, Leases, is the new lease accounting standard for public sector and governmental entities. GASB 87 requires all leases to be reported as capital leases. It also eliminates the classification of an operating lease unless that lease is short-term (12 months or less). The lease guidance was updated to provide better information for financial statement users.
When does GASB 87, Leases, take effect?
GASB 87 is currently effective for all government entities. The effective date was for periods beginning after June 15, 2021.
HOW EIDE BAILLY CAN HELP WITH YOUR LEASE ISSUES
Regardless of private company versus public sector, the new leasing standards have a sweeping impact on organizations. Organizations should focus on implementation early and understand the issues they will face when it comes to complying with the new FASB and GASB standards.
We have developed steps to help you in implementation of each standard.