FASB Releases Lease Accounting Standard

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Under the new guidance, a lessee will be required to recognize assets and liabilities for leases with lease terms of more than 12 months. Consistent with current Generally Accepted Accounting Principles (GAAP), the recognition, measurement, and presentation of expenses and cash flows arising from a lease by a lessee primarily will depend on its classification as a finance or operating lease. However, unlike current GAAP—which requires only capital leases to be recognized on the balance sheet—the new ASU will require both types of leases to be recognized on the balance sheet.

The amendments in this Update are effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years, for any of the following:

  1. A public business entity.
  2. A not-for-profit entity that has issued, or is a conduit bond obligor for, securities that are traded, listed, or quoted on an exchange or an over-the-counter market.
  3. An employee benefit plan that files financial statements with the U.S. Securities and Exchange Commission (SEC).

For all other entities, the amendments in this Update are effective for fiscal years beginning after December 15, 2019, and interim periods within fiscal years beginning after December 15, 2020.

Early application of the amendments in this Update is permitted for all entities.

For more information on this new standard, please refer to this press release. If you’re interested in better understanding how this new standard might impact your organization, please contact David Semendinger, Lead Partner, Quality Control Services Group, at 301.231.6200.

About David H. Semendinger II

David H. Semendinger II has written 1 post in this blog.

David H. Semendinger II, CPA, leads Aronson LLC's Quality Control Group. With more than 24 years of public accounting experience, David's proactive approach to client service is the foundation of his strong business relationships. David has extensive experience in the areas of financial reporting and financial and operational controls, and his expertise extends to complex revenue recognition issues, equity and debt financing transactions, business combinations and related issues. He has managed numerous audits, reviews and compilations for a diverse set of companies, including those with annual revenues exceeding $1B. In addition, he has experience in the planning, documentation and testing of management's assertions on the effectiveness of internal controls (SOX 404 compliance). David is a Certified Public Accountant and a member of the AICPA. He earned a bachelor's degree from George Mason University and is a graduate of McGladrey's Business Advisor Program at the University of Chicago Graduate School of Business.

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