How to Prepare for The New Lease Standard
In Mid-July, FASB members unanimously voted to extend the effective date for lease accounting for private companies, nonprofits, and small companies. This extended deadline applies to the adoption of ASC 326 and ASC 815, the Current Expected Credit Losses and the Derivatives and Hedging. This is good news for companies that were struggling to meet the new lease standard deadline. With internal resources already stretched to the limit, many managers reported feeling overwhelmed while preparing for the new changes.
Here are a couple of things that you can do to prepare for these new lease standard:
Identify your inventory and determine if it is covered by this new lease standard.
Create a transition timeline and action plan.
Run through an analysis to see how the new lease standard will affect your company’s financial statements.
Make sure that management fully understands the impact of the new lease standard in the present and on the future financial reports.
See if you find any way that you can make the improvements needed in the financial report.
Going through the process regularly can help to avoid some of that added pressure of the impending deadline.
FASB is accepting early applications for all organizations. By preparing for these lease changes now, you can be ready for any bumps in the road.
The longer you procrastinate, the more difficult it will be to meet the deadline. Wishful thinkers may be hoping that FASB delays the deadline again, but there is no indication that will happen.