ASC

Why start now

Even though your deadline for complying moved out, it is time for private organizations to get ready for ASC 842 compliance. Your leasing portfolio is probably more complex than you realize so having this extra time can really pay off as you start to automate the process.

The US GAAP lease accounting standard, ASC 842, requires that all leases, both operating and finance, are moved on-balance sheet unless the lease term is less than 12 months. The on-balance sheet requirement of the new standard is creating a huge implementation challenge for many companies. The challenge is exacerbated for companies with large equipment leasing portfolios because equipment leasing programs are typically decentralized, making it difficult to track down the data needed to comply with the new standards.

To comply, companies must:

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Learn the technical accounting and make policy judgements
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Collect lease accounting data and supporting documents
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Implement lease accounting and administration software
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Case study

NuStar Energy Lease Accounting

Compliance – NuStar successfully transitioned to ASC 842 on January 1, 2019. The accounting team was able to perform the monthly close on time and file its first interim statement (SEC Form 10-Q) in April 2019.
Visibility – With all of the company’s leasing data centralized in a single repository, NuStar’s leasing program is now quantifiable, reportable, and manageable.
Cost Savings – The accounting team worked with the procurement organization to identify the assets so that more cost-effective contracting mechanisms could be negotiated.