Effective Dates
The new lease accounting standards, under FASB ASC 842 and IFRS 16, are already effective for some organizations. Upcoming effective dates for entities that have not yet implemented are as follows:
- FASB ASC 842 – effective for non-public entities for financial statements issued for fiscal years beginning after December 15, 2021 and interim periods within fiscal years beginning after December 15, 2022.
- GASB S-87 – effective for fiscal years beginning after June 15, 2021 and all reporting periods thereafter.
Our team has the knowledge, tools and resources to support you through implementation
Education and Policy Elections
To implement lease accounting standards effectively, grasp updated requirements, identify changes from prior standards, make necessary policy elections, and collect essential data from lease agreements. Evaluate impacts on financial reporting and consult our experts for guidance.
Contract Identification
Understanding lease qualifications under new standards requires significant time for data collection. Beyond traditional leases, identify agreements with embedded leases. Collaborate with accounting teams, decision-makers, and managers to pinpoint lease-containing contracts. Decentralized organizations may need extra time and effort for this process.
Data Collection
After identifying all lease contracts, you’ll need copies to summarize key data points for accurate financial reporting. More than 30 data points, and more for complex leases, must be considered. A defined process ensures accurate data collection, no duplication, and suitable formatting. Sikich offers a tool organizing 50+ relevant data points for implementation.
Accounting Solution Selection
You’ve gathered lease data, but how will you calculate lease liabilities, ROU assets, journal entries, and disclosure summaries? Choosing the right accounting solution is vital. Our team offers a spreadsheet-based tool for FASB ASC 842 reporting. We can also assist in selecting alternative solutions tailored to your organization’s needs.
Execution
Depending on the accounting software solution you select, you will begin entering contract terms (one-by-one or possibly through bulk import functionality). Design and implement controls around this process to ensure that all contracts are entered accurately and that data is properly accumulated for journal entries and financial statement note disclosures.
Maintenance
Once lease contract terms are entered into your accounting solution and you’ve made accounting transition adjustments, the work is not done. You will have periodic journal entries and financial statement disclosure summaries. You may need to also update calculations for changes in circumstances requiring remeasurement or for lease modifications.
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Greg Fiedler
Greg Fiedler
