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Lease Accounting SAB 74 Disclosures Preview

Lease Accounting SAB 74 Disclosures

By | Research, White Papers

Read SEC Filing Excerpts from the Top 100 US Companies

Updated July 2018

Lease Accounting SAB 74 Disclosures Preview

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 June 30, 2017 and May 31, 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

Key Findings from the Lease Accounting SAB 74 Disclosure Analysis Report

Early Adoption 

With the revenue recognition standard (ASC 606), a number of companies, including Alphabet, Microsoft, General Dynamics, Ford, and Raytheon, were early adopters. Only one of the 100 companies analyzed, Microsoft, adopted the ASC 842 standards early. No other companies stated their intention to early adopt. 

Transition Approach 

At the time these disclosures were analyzed, the only available transition approach for lessees was the modified retrospective approach, so companies either said they would elect that approach or did not comment on the approach. However, a new transition approach was proposed in November 2017 and approved in March 2018. We expect companies to state their selection of transition method in their next disclosures. 

Material Impacts to Balance Sheets 

As expected, the new right-of-use assets and liabilities being added to balance sheets are expected to be the most material impact to financial statements. 76% 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 20% are still analyzing the potential impacts of the new standard. 

To learn more about the findings, download the Lease Accounting SAB 74 Disclosures report.

Lease Accounting Progress Report 2017

Lease Accounting Progress Report 2017

By | Research, White Papers

Are you ahead of schedule or behind with your ASC 842 lease accounting project? Benchmark yourself against your peers by reviewing our 2017 Progress Report, published on the one-year anniversary of FASB’s new leasing standard. Over 250 finance professionals provided their progress on key tasks such as resource staffing, budget approval, data collection, and software selection.

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Lease Accounting Readiness Study

By | Research, White Papers

How Do You Measure Up?

How Do Your Systems, Processes and Controls Compare to Fortune 500 Companies?

Are Fortune 500 companies ready for the new lease accounting standards? Will they be ready for what has been called “the biggest ever accounting change” by the 2019 deadline?

In March of 2016, we surveyed finance, treasury, and accounting professionals to find out what their state of readiness was. We asked questions like:

  • How much pain are companies anticipating with the implementation? Will this be worse than a root canal?
  • Do companies know what equipment they are leasing and where it is?
  • Who really owns equipment leasing programs at large companies? Procurement? Treasury? Accounting? No one?
  • What systems are being used to track equipment leases? ERP? Real estate? Spreadsheets? File cabinets?
  • What is at stake if companies cannot comply with the new accounting standards? Higher TCO? Weakened cash flows?

Download the study results to find out what they said.

Lease Accounting Readiness Study

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