During the first quarter of this new year, FASB will issue its new standards on Leases. While these new standards will provide a significant improvement to financial reporting, there will be changes for those who engage in significant activities as a lessee. The new standards are fundamentally consistent with existing GAAP. There are some key dates to know in order to prepare for this transition. For public companies, the effective date for the new standard is December 16, 2018. For private companies, the effective date of the new standard is December 15, 2019. Now is the time to start planning and putting together a timeline for your transition to these new standards.
What’s changing? The new leases standards will increase transparency and comparability among organizations that lease buildings, equipment, and other assets by recognizing the assets and liability that arise from lease transactions. Current off-balance sheet leasing activities will be required to be reflected on balance sheets so that investors and other users of financial statement can more readily and accurately understand the rights and obligations associated with these transactions.
Roark Financial Consultants can help you put a plan in place and make this transition a smooth one. For more information on these new standards on Leases, here is a great article from FASB.