Deferral should not mean delay for lease accounting implementation
Businesses should act now to begin ASC 842 implementations
Adopting ASC 842 is a complex undertaking. Companies face various challenges throughout the implementation process. The time and effort required for adoption is also often underestimated. Therefore, the Financial Accounting Standards Board (FASB) has proposed a deferred deadline to allow companies more time to assess their current lease portfolio, accurately select a software solution, adopt appropriate process and procedures and develop a plan to move forward. Through a successful adoption, businesses not only achieve compliance but also gains greater efficiency which can mean potential cost savings opportunities as well.
Stacy Dow, technical accounting consulting lead, presents a short video explaining the reason for the deferral and why it’s important to start implementing now.
FASB has proposed delaying the deadline of Accounting Standards Update (ASU) 2016-02, Leases (Topic 842), for all entities, other than public business entities and certain nonprofit organizations and employee benefit plans, by one year. The effective date for calendar-year entities affected by the deferral would change from the year ending Dec. 31, 2020 to the year ending Dec. 31, 2021. For government entities, initial indications are that there will not be a deferral from GASB 87. As such, the effective date for a governmental entity with a June 30 year-end continues to be the year ending June 30, 2021.