In June 2020, the Financial Accounting Standards Board voted to postpone the new lease accounting standards for leased assets after a unanimous vote. The delay gives private companies more time to figure out how the new lease accounting standards affect the rental details for their properties and other leased assets as they report them on a balance sheet for the first time.
Prepare and Evaluate the New Lease Standards for your Business
Postponing the change in lease accounting means the effective date for privately held companies is now effective for fiscal years beginning after December 15, 2021. That means calendar year-end privately held companies have until January 1, 2022, to conform with the new standard. Private companies must use this added breathing room to prepare and evaluate these complexities to ensure a smooth transition to the new standard.
Credit Losses and Accounting for Hedges Standards Also Postponed
In addition to delaying the standards on accounting for leases, the FASB also unanimously voted to delay the standards for credit losses and accounting for hedges. The credit loss effective date is now effective for fiscal years beginning after December 15, 2022. The accounting for hedges date is now effective for fiscal years beginning after December 15, 2020.
Early Adoption of New Lease Standards May Help Ease the Transition
Privately held companies may still elect to early-adopt these standards to avoid being in a position where many are right now—unsure of what the standards mean, how to implement them, and which software to use.
DHJJ Business Advisors
Our advisors at DHJJ help our business clients navigate through this complex and challenging change in lease accounting standards. Contact one of our assurance advisors by calling 630-420-1360. Click here to find out more about DHJJ’s Audit and Assurance Team.