Calendar year-end private companies, small public companies, and non-profits will have to account for leases differently in the new year, thanks to a new lease accounting standard implemented by the Financial Accounting Standards Board (FASB).
Effective January 1, 2022, the new standard requires companies to track and categorize all leases, collect quantitative and qualitative data, and report that information on the balance sheet, income statement, and disclosures to the financial statements.
All leases longer than one year will now be recorded as an asset and corresponding liability on the balance sheet. Companies will have to calculate the present value of their future lease payments to record this correctly.
Companies that have a large number of leases should consider a strategic implementation plan, including data management, accounting process and policy development, resource requirements, technology implementation, tax impacts, and other issues.
CRR has developed a present value lease calculation aid to help our clients navigate the new lease accounting standard. If you have questions, would like a copy of our lease calculation aid, or would like assistance, please leave a comment below or feel free to reach out to me directly. I’m happy to help!