What to Expect from the New Lease Accounting Standard
In the past two months, there has been a notable silence surrounding the proposed changes to lease accounting. However,
it's important to understand that behind the scenes, the staffs of the Financial Accounting Standards Board (FASB) and
the International Accounting Standards Board (IASB) have been diligently working towards finalizing a comprehensive
standard. This collaborative effort between the two prominent accounting standards bodies has been progressing steadily,
and it is anticipated that the Boards are nearing the completion of the final standard, which will be issued by each of
them.
While the exact details of how extensively these standards will be exposed for public comment remain
uncertain, it is reasonable to anticipate that they will be ready for issuance by the end of 2015. This development
signals a significant shift in lease accounting practices that will impact businesses worldwide.
One pressing
question that still lingers is the effective date of these new standards. It is expected that the effective date will
not be set any earlier than January 1, 2018, with the possibility of granting nonpublic business entities an additional
year before the standards become effective for them. Under the presumption of an effective date of January 1, 2018, a
calendar-year company that presents three-year comparative financial statements would need to start applying the
transition provisions on January 1, 2016, marking the beginning of the earliest comparative period
presented.
While 2018 might appear to be distant on the horizon, the preparatory work required to gather lease
information and conduct the necessary calculations can be exceptionally challenging. It is imperative for businesses to
begin their preparations now to ensure a smooth transition. At iLeasePro, we are committed to closely monitoring this
project's developments so that we can seamlessly incorporate the final accounting changes into our state-of-the-art
technology solution for lessees. Our goal is to empower businesses to navigate these changes effectively and maintain
compliance with the evolving lease accounting standards. Stay informed, stay prepared – the future of lease accounting
is on the horizon.
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