As the account year comes to an end, there is a major accounting change coming in 2016, with the FASB’s vote to proceed with its new standard for reporting lease obligations starts the clock ticking.
The FASB board voted to proceed with the standard, which will require companies to include lease obligations on their balance sheets. The final Accounting Standards Update is expected to be published in early 2016.
FASB decided the upcoming standard will be effective for public companies for fiscal years (and interim periods within those fiscal years) starting after December 15, 2018. For private companies, it will be effective for yearly periods beginning after December 15, 2019. The board will permit companies to adopt the measure early once the standard is published.
The big changes to lessee accounting “may require preparers to implement new systems and internal controls and will result in substantial additions of lease obligations to many balance sheets,” the Journal of Accountancy reported.
Still, the changes may not be as bad for U.S. companies as they could have been had FASB gone through with previous plans to converge its new lease-accounting standard with that of the International Accounting Standards Board. In August 2014, after years of trying to meld their standards, the two boards announced that they were going to go their separate ways.
To learn more about the timetable for the Financial Accounting Standards Board’s new leasing standard, click on the link below to read the entire article.
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REF: CFO.com | US | (Nov. 12, 2015)