Ace lease accounting under ASC 842 requirements
Every organization is affected by the replacement of ASC 840 to the new ASC 842. The Financial Accounting Standards Board’s (FASB) new lease accounting standard requires both operating and finance leases to be recognized on company balance sheets.
As organizations transfer trillions of dollars worth of leased assets and liabilities to corporate balance sheets, they will need to:
- Identify leases across the organization.
- Create detailed accounting policies to determine which leases require adjustment under the new standard.
- Calculate right-of-use asset and lease liabilities.
- Maintain the ASC 842 standard on an ongoing basis.
- And much more.
CFGI has your back
A smooth transition into the ASC 842 era of lease accounting calls for a combination of advanced technical accounting skills, business acumen and IT expertise.
CFGI’s cross-functional experts provide clear perspective on your accounting lease contracts, processes and compliance programs, and make recommendations for the strategic use of technology to help you achieve and maintain compliance as painlessly as possible.
From obstacle to opportunity in four stages
CFGI’s technical accounting experts can be at your side every step of the way, or wherever you need them most:
Identify your lease accounting project leads and create a steering committee made up of experts from accounting, finance, treasury, operations, procurement, legal and tax, among others. With support from CFGI, this team will be responsible for gathering all lease data throughout the organization in order to identify leases – including those embedded in service contracts.
2. Design and evaluation
Work with stakeholders to establish a compliance policy for leased assets, preferably with input from external auditors. Then set up a project team that includes technical accounting
experts with deep experience in financial reporting coordinate implementation. Finally, the project leader can begin setting accounting policies backed by meticulous documentation and precise guidance to determine the leases that require adjustment under ASC 842.
Calculate and process the new entries for operating leases into the balance sheet. Meanwhile, implement formal training on the new lease accounting policies and considerations using mock examples of finance, operating and embedded leases to ensure proper implementation.
4. Ongoing maintenance
Assess some of the ways you can optimize ongoing compliance with ASC 842. Consider creating a centralized data-management system that sustainably manages leases and their impact on balance sheets. CFGI can help you use ASC 842 as an opportunity to deploy new lease accounting software that automates the standard’s processes and saves time and money in the long run.