As 2018 comes to an end, the first lease accounting deadlines are arriving. All public companies will finish up their implementation projects this upcoming year, with effective dates starting on January 1, 2019 for the earliest filers.
There were an overwhelming number of articles covering the new standards published in 2018. We reviewed hundreds of articles published in journals, blog posts, and big audit firm guides to hand pick the 10 best articles of the year. These guides can offer some last minute guidance for public company filers and help private companies get started on their implementations the right way.
1. Three Steps to Calculate the IBR
The new standards require the lease liability to be discounted at the rate specified in the lease, but many lease contracts don’t include a discount rate. When that’s the case, the FASB requires companies to use their IBR, a rate that few companies have needed to calculate before now. Find out everything you need to know to calculate your company’s IBR.
2. Loan Covenants: Make or Break
An influx of liabilities onto corporate balance sheets has some organizations worried about the status of their loan covenants. This article analyzes the impact to loan covenants and suggests how companies can lessen the impact of leases to corporate indebtedness in the future. Find out how your company can get ahead of the loan covenant impact.
3. Sale-Leaseback and New GAAP
Sale-Leasebacks are popular arrangements to generate cash flow and utilize more effective financing methods. ASC 842 aligns sale-leaseback accounting requirements with the new revenue recognition standard, ASC 606. Here’s a brief analysis, complete with examples, of the new sale-leaseback guidance.
4. Tax Impacts of Leasing: From 840 to 842
The new lease accounting standards will not only affect the accounting group, but also the tax team. Even though tax has its own lease classification system – true tax and non-tax leases – ASC 842 could still create changes in deferred tax assets and liabilities. Here’s a quick primer on the tax changes and challenges.
5. Separation Anxiety: Lease and Non-Lease Components
FASB has given companies an option to choose whether or not to separate lease and non-lease components by asset class. Even though the process of separating the components can be complex and difficult, companies should carefully consider the implications of the expedient before jumping on it. Learn more about the pros and cons of separating the components and how to properly quantify and separate the components.
6. Critical Features of Lease Accounting Software
Selecting a complete software solution to comply with ASC 842 and IFRS 16 has been a daunting task for many companies. Different corporations will have different needs. However, there are a few features that every company should consider before selecting their solution. View this checklist of the top lease accounting software features needed to get companies to compliance.
7. Expediating Easements
When FASB announced a new land easement practical expedient in January 2018, it cleared up a lot of confusion for many lessees. However, there is still a significant amount of information that companies need to wrap their arms around when it comes to land easements. Check out this in depth look at the new land easement practical expedient from PwC.
8. Hidden Benefits of the New Standards
The announcement of several new accounting standards has created a significant burden for accounting organizations and companies as a whole. However, the new lease accounting standard may also provide some benefits for companies that focus on strategic implementation. Find out how you can turn this compliance burden into cost-savings and efficiencies.
9. Lessons Learned from Real World Implementations
Companies adopting later in 2019 or in 2020 will have the advantage of learning from the lessons of earlier implementation projects. From impact assessment to lease process transformation, PwC summarizes how to conquer the three phases of implementing the lease accounting project.
10. Top 10 Things to Do to Prepare for the Effective Date
Public companies are overwhelmed with steps to take as we near the end of 2018. However, there are 10 key issues that public companies should consider in the last 90 days before their deadline, and that private companies should note for when they approach their deadline next year. Check out the top 10 issues public companies should consider.