By Renae Kinney, GreatAmerica – The Financial Accounting Standard Board (“FASB”) issued a new lease accounting standard in February 2016 in an effort to improve transparency of “off-balance sheet” obligations. The new lease accounting standard is also commonly known as “Topic 842.” Just recently, FASB has issued updated guidance delaying the effective date of the new lease accounting standard for private companies.
Prior to release of the updated guidance, the new lease accounting standard would have been effective for private companies using calendar year financial statements in January 2020; however, private companies will now have an additional year to prepare for the adoption of the new lease accounting standard. A private company using calendar year financial statements will need to follow the new lease accounting standard for calendar year 2021. Companies should not delay their adoption and implementation planning efforts. Companies should also consider consulting with their auditors regarding how the new lease accounting standard will impact their financial statements. They should also consider consulting with their technology and software providers regarding changes to support the new standard.
What is Topic 842?
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SOURCE GreatAmerica
