The new lease accounting standards were under development for a period of 10 years. A joint project between FASB and IASB, multiple exposure drafts were issued with extensive public comments. Before FASB’s ASU 2016-02 and IFRS 16, lease accounting rules had not been updated in 40 years. The original rationale behind the standards was to protect everyday investors from potentially misleading financial statements.
Top 10 Guides and Resources
A wealth of excellent documentation has been produced on the lease accounting standards. The boards (FASB and IASB) have each published impact analysis studies and detailed accounting examples in addition to the actual lease accounting standards documentation itself. Each of the Big Four (PWC, EY, Deloitte, and KPMG) have also published excellent perspectives and discussion documents as well as guides to interpret the standards.
The deadline for applying the new standards is the end of 2019. However, actual deadlines will vary depending upon your fiscal year. For companies whose fiscal years end on December 31, the deadline will be in 2019. For companies whose fiscal years end March 30, June 30, or September 30, the deadline will be the respective dates in 2020.
Test Your Knowledge
Are you an expert on the new lease accounting standards – FASB ASC 842 and IFRS 16? Test your knowledge of real estate leasing, equipment leasing, and the technical standards in our lease accounting challenges. Try our five different crossword puzzles, word searches, and word jumbles to self-assess how much you know.
Asset-Level Lease Accounting
Download our Technical Accounting White Paper to Understand Why It is Critical for the New ASC 842 Standard
The White Paper covers:
- Differences between contract and asset-level lease accounting
- Examples of impacted decisions, judgments, and events
- Asset-level data needed at start, middle, and end of term
- Financial, tax, and management accounting requirements
- Key implementation challenges with data and accurate calculations