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Lease Accounting Services

Navigating and implementing GASB 87 and FASB Accounting Standards Codification (ASC) 842 on lease accounting.
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Forvis Mazars brings industry best practices and a collaborative approach to supporting management teams in their adoption of FASB ASC 842 and GASB 87.

On Feb. 25, 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2016-02 Leases (Topic 842), a new standard that will govern the accounting for lease contracts. To affect these changes, this ASU, along with several related ASUs issued subsequently, amends the existing FASB Accounting Standards Codification (ASC) and creates a new Topic 842, Leases.

When ASC Topic 842 is Effective – At a Glance

In the U.S., the standard is effective for private companies for fiscal years beginning after Dec. 15, 2021, and interim periods within fiscal years beginning after Dec. 15, 2022. For public business entities, certain nonprofit entities, and employee benefit plans that file financial statements with the U.S. Securities and Exchange Commission, the standard became effective for fiscal years beginning after Dec. 15, 2018, including interim periods within those fiscal years. Public nonprofit organizations that had not yet issued (or made available to issue) financial statements reflecting the new lease accounting guidance were able to apply the standard for fiscal years beginning after Dec. 15, 2019, including interim periods within those fiscal years.

  • PBEs, Certain Not-for-Profit Entities, Employee Benefit Plans that file with SEC: Fiscal years beginning after Dec. 15, 2018
  • Public Not-for-Profit Organizations that Had Not Yet Issued Financial Statements: Fiscal Years after Dec. 15, 2019
  • Private Companies: Fiscal years beginning after Dec. 15, 2021
  • Interim Periods - Fiscal Years: Fiscal years beginning after Dec. 15, 2022

FASB ASC 842 Resources

The new lease standard replaces existing lease guidance included in ASC Topic 840, Leases. The key difference between existing guidance under ASC Topic 840 and the new guidance under ASC Topic 842 is the requirement for lessees to recognize on their balance sheet all lease contracts with lease terms greater than 12 months, including operating leases. Specifically, lessees are required to recognize on their balance sheet at lease commencement, both:

  • A right-of-use (ROU) asset, representing the lessee’s right to use the leased asset over the term of the lease; and
  • A lease liability, representing the lessee’s contractual obligation to make lease payments over the lease term.

The new lease standard also requires lessees to classify leases as either operating or finance leases, which are similar to the operating and capital lease classifications under ASC Topic 840. However, the distinction between these two classifications under the new standard does not relate to balance sheet treatment but instead relates to treatment and recognition in the statements of income and cash flows.

Lessor accounting is largely unchanged from current U.S. GAAP, with the exception of some revisions made to ensure consistency with revised lessee guidance and with FASB ASC Topic 606, Revenue from Contracts with Customers.

For help adopting this standard, explore our latest guidance on FASB.

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GASB 87 Resources

The adoption deadline for GASB’s lease guidance is fast approaching. As you implement these changes, you may face numerous challenges, including separating lease and nonlease components, collecting additional data for disclosures, making necessary IT system updates, capturing remeasurement triggers, and seeking assistance with debt covenants.

For help adopting this standard, explore our latest guidance on GASB.

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LeaseVision - Our Solution to the New Lease Standards

Our three-part solution is the complete package. It iscritical to implementation and gives ongoing support by generating journal entries anddisclosure information.

  1. AI-Powered LeaseAnalysis
  2. Implementation Road Map
  3. ExcelBased Calculation Tool
Learn more

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