Accounting for Leases: Delay to ASC Topic 842?
If you are a private real estate company, you may now have another year to prepare to adopt ASC Topic 842, a new lease accounting standard from FASB that fundamentally changes the accounting guidance governing all leases. FASB plans to propose delaying the effective date of the new standards for calendar-year-end preparers that are not public business entities from January 1, 2020 to until January 1, 2021. In order to comply with the standard, companies may encounter substantial work to gather lease contracts and obtain all data necessary from the leases in order to account appropriately for the lease. An entity needs to assess whether it has the resources and technology available to capture all necessary data. Private companies should continue to follow FASB’s proposed plans. If you have not commenced the gathering of information exercise and assessed the accounting implications, there is still time left to be in a position to be in compliance upon the effective date. Real estate companies should ensure they understand the accounting treatment, steps and potential challenges in adopting this standard, regardless of the effective date, as the standard will have an impact on the accounting and financial reporting functions and may require an investment in software.
Find out more about ASC Topic 842:
- ASC Topic 842, Leases: Considerations
- ASC 842: Accounting for Leases
- New Accounting Standards Allow Sellers/Lessees in Sale Leaseback Transactions Recognize Gain in Certain Circumstances