Download this white paper to learn the hidden costs of the new lease accounting standards and what your company can do to prepare for and address these challenges.
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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LeaseAccelerator: Pioneering the New Category of Enterprise Lease Accounting
The new category of software is crucial for enterprise-wide compliance with ASC 842 and IFR 16.
By Sandeepa Majumdar
Published in February 2018
Published in CFO Tech Outlook
Read an Excerpt
Although the new leasing standards will come into effect in 2019, with leased assets scattered everywhere, organizations are left with very little time to analyze, validate, and accurately generate data and audit trails. While the scenario is growing complex, many organizations are still using traditional spreadsheets and homegrown systems to manage their lease portfolios, which result in billing errors and evergreen fees. What they require is a dynamic lease accounting application that can automate the business processes at the enterprise scale.
Enter LeaseAccelerator, a pure play lease accounting software provider that has it all covered. Having performed lease accounting and management for over a decade, LeaseAccelerator is the first of its kind cloud-based SaaS application that automates every step in the leasing lifecycle. It tracks all the assets under the new regulations and generates reliable leasing data, in no time, for financial disclosures. “We are on a mission to optimize lease accounting for enterprises. While other software vendors have recently jumped onto the bandwagon to offer lease accounting, our experience in R&D, customer support, and product strategy, developed over the years makes us the go-to solution provider,” notes Michael Keeler, CEO, LeaseAccelerator.
Learn More about the New Lease Accounting Standards
White Papers, Handbooks, and Research Studies
Two years have passed since the initial publication of the new ASC 842 Leases standard by FASB. In an effort to provide a quantitative progress report on the status of compliance efforts, LeaseAccelerator conducted a research study in late January 2018. Over 300 finance and accounting leaders were surveyed to understand progress in forming a project team, updating policies, collecting data, and selecting software.
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.
Read IDC’s Market Spotlight report on the new Enterprise Lease Accounting software market. This IDC Market Spotlight examines the ramifications of IFRS 16 and ASC 842 on companies. The paper also looks at the role of lease accounting software in meeting these strategically important business process and financial statement reporting requirements.