Adopting the New Lease Accounting Standard
After years of deliberation and numerous exposure drafts, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2016-02 – Leases (Topic 842) on February 25, 2016.
Generally, ASU 2016-02 results in any lease agreement that is longer than 12 months being recorded on the balance sheet. Leases are said to be one of the largest forms of off-balance sheet financing by the FASB and others. The changes that accompany ASU 2016-02 will primarily impact lessees, with less impact on lessors, and are effective for fiscal years beginning after December 15, 2019 for private companies (effective for fiscal years beginning after December 15, 2018 for public companies).
