Just a reminder the Financial Accounting Standards Board (FASB) previously issued Lease Accounting Standard as codified in Accounting Standard Codification (ASC) No. 842, is fast approaching for nonpublic entities maintaining GAAP financial statements.
Effective January 1, 2022, ASC 842 fundamentally changes the accounting for lessees with operating leases having a term greater than 12-months. The accounting standard will require these leases to be recorded on the lessee’s balance sheet with a right-to-use asset and a lease liability which may substantially change balance sheet measurements, key ratios and have the potential to trigger loan covenants in place in 2022 when this standard becomes effective.
The standard offers two transitional methods with practical expedients and will require expanded qualitative and quantitative disclosures in your financial statements.
Because this standard is requiring more time by company finance personnel to implement than the industry anticipated, DHA will be offering accounting support services for lease accounting beginning in October 2021 which will include the use of best-in-class cloud-based software to accelerate the implementation and support needed by management with the quantitative and qualitative compliance burdens.
Look for our communications on this lease accounting support coming in September and contact us early to reserve a spot for your support necessary to effectively get this standard implemented by January 1, 2022 for your company.
Written By Brad Reich, DHA CPAs