Many companies still have plenty of work to do to comply with the new lease accounting standard. What’s holding them up?
December 3, 2018 | CFO Magazine
In February 2016, the Financial Accounting Standards Board issued new rules on lease accounting that will move most operating leases onto a company’s balance sheet. Currently, only capital leases are required to be recognized on the balance sheet. Public entities are required to adopt the new leases standard for reporting periods beginning after December 15, 2018; nonpublic entities have an extra year to adopt.
Both public and private companies have been working the past two years to come up with a clear plan to meet all the requirements of Accounting Standards Update No. 2016-02, Leases (Topic 842). While many have plans in place, implementation is another matter. Some organizations are still well short of full compliance.
The change in lease accounting comes on the heels of the revenue recognition standard implemented in 2017. Christopher Wright, global leader of business performance improvement at Protiviti, says the effort needed differs from that needed to comply with the new revenue recognition rules.
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