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September 1, 2018 | CFO.com | US
There’s no reason that finance executives should be caught off-balance by the new lease accounting standard.
Yes, ASC 842 (its official name, under the Financial Accounting Standards Board) and the IASB’s IFRS 16 (as labeled by the International Accounting Standards Board) represent the first significant change in 40 years for lease accounting standard. But the standard, which goes into effect on January 1, 2019, for calendar-year public companies—private companies have an extra year to implement it—was originally issued in February 2016.
The rule’s biggest impact will be absorbed by lessees, which are required to recognize certain leases, and their corresponding liabilities, on their balance sheets. For CFOs, especially those at organizations where leasing comprises a big portion of business operations, the accounting change could alter key financial measures, such as return on assets.
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