Has your company or organization implemented the new lease changes for financial reporting?
PDR CPA’s + Advisors can assist you with the complexity of the new lease standard and ensure that leases are being properly recorded.
Accounting Standards Update – ASU No. 2016-052, Leases (ASC 842) was effective for periods beginning after December 15, 2021 for private companies. The new ASU aims to improve the transparency and comparability of the financial statements for investors and companies. The core principle of ASC 842 is that a lessee should recognize the assets and liabilities that arise from leases.
What does this mean?
• Entities that follow Generally Accepted Accounting Principles (GAAP) and have leases longer than 12 months must comply with ASC 842.
• Under the new standard, both financing and operating leases would create a right-of-use asset and liability to be reflected separately on the balance sheet.
• For finance leases the lessee will record amortization expense (depreciation) on the right-of-use asset and interest expense on the lease liability.
• For operating leases the lessee will present lease expense as a single operating expense on the income statement. The lease expense will be calculated on a straight-line basis.
Our professionals at PDR CPA’s + Advisors are here to assist you with the transition to the new accounting standard and are offering access to Lease Crunch, an affordable software program to ensure compliance with the new standard and access to maintain leases for accurate financial reporting.