After nearly a decade of planning and debate, the Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB) issued new lease accounting standards in the first quarter of 2016. In general, the changes will take effect in 2019 for public companies and 2020 for private companies.
The new standards are designed to bring additional transparency to financial reporting by requiring organizations with leased assets to recognize the rights and obligations of those leases on the balance sheet. Since the reporting of operating leases is a rather substantial change from current GAAP principles, these changes will require modifications to your organization’s financial reporting.
While the document outlining the details of these FASB lease changes is quite long and thorough, the most impactful changes are regarding lease classification and financial reporting: