Are You Prepared For ASC 842? The New Lease Accounting Standard

The FASB (Financial Accounting Standard Board) has issued the new lease accounting standard, ASC 842.  This replaces the previous leasing standard, ASC 840 which is almost 40 years old.  The purpose of the new standard is to close a major accounting loophole in ASC 840: off-balance sheet operating leases.

Accounting teams need to evaluate and identify which leases should now be capitalized and understand the net present value at the time they should begin capitalizing the leases.  They will also need to set up corresponding lease schedules and the monthly schedules going forward for each interest expense and liability and how those payments will look from a leasing standpoint.

NetSuite Can Help You Manage The New Leases

Within the fixed asset capabilities NetSuite has lease management capabilities.  NetSuite will record the depreciation and decrease lease liability based on payment schedule and record the interest expense as well.

When Do The Changes Come Into Effect?

A public company with a calendar year end should have been accounting for the leases under the new standards as of Jan 1, 2019.  A private company with a calendar year end is accountable as of Jan 1, 2020.  You can’t start soon enough to prepare for this change!  To discuss whether you are prepared and if NetSuite can help you manage the new lease accounting standard please contact us.

 

Written By iSP3’s NetSuite Team
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SOURCES
How to Prepare for ASC 842 the New Lease Accounting Standard
Kendall Fisher, Executive Producer and Host of The NetSuite Podcast
Carrie Augustine, CPA and Oracle NetSuite’s Software Industry Expert