RESTON, Va. – April 17, 2018 – LeaseAccelerator, the pioneer of the Enterprise Lease Accounting software category, announced today the release of the first SAB 74 Disclosure Analysis for Lease Accounting report, an assessment of recent SEC filings related to the adoption of ASC 842. The report includes comments issued by the 100 US companies with the largest dollar value of leasing obligations.
Updated September 2018
As the deadlines for ASC 842 get closer, companies will be required to issue SAB 74 Disclosures about the effects that the new standards might have. In an effort to assist the industry with accelerated adoption of ASC 842, LeaseAccelerator compiled a Lease Accounting SAB 74 Disclosures Analysis report with examples from 100 SEC registrants over the past 15 months. The study focuses on the top 100 US public companies as ranked by the total leasing obligations tabularized in the footnotes of annual filings. The source of the data was 10-Q and 10-K filings submitted between October 1st, 2017 and September 7th, 2018 .
Impacts to Financial Statements
- Balance Sheet Impact
- Income Statement Impact
- Cash Flow Statement Impact
- Elections of Practical Expedients
Progress on ASC 842 Implementation
- Lease Accounting Project Teams
- Financial Policies and Controls
- Lease Accounting Software
- Business Processes
With the revenue recognition standard (ASC 606) a number of companies including Alphabet, Microsoft, General Dynamics, Ford, and Raytheon were early adopters. Only two of the 100 companies analyzed, Microsoft and Target, adopted the standards early. No other companies stated their intention to early adopt.
A new optional transition method was approved in July 2018. Some companies who filed after that date referenced the new transition method in their disclosures, either stating their intention to elect the new method or stating that they were still evaluating whether or not they chose to elect the new method. As of the time of this study, 14% of the companies stated they would choose the new method, while 9% stated they were undecided.
Material Impacts to Balance Sheets
As expected, the new right-of-use assets and liabilities being added to balance sheets is expected to be the most material impact to financial statements. 83% of the Top 100 reported that there will be a material impact resulting from the transfer of most right-of-use assets and liabilities on to corporate balance sheets. Another 14% are still analyzing the potential impacts of the new standard.
To learn more about the findings, download the Lease Accounting SAB 74 Disclosures report.
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