Cresa, LeaseCrunch, News

Private Companies Have Another Year To Deal With New Lease Accounting Standards, And They’ll Probably Need It

By Dees Stribling  | Originally posted on:

The Financial Accounting Standards Board has given U.S. private companies and nonprofits another year to start treating their operating leases as liabilities on their balance sheets. Now they have to do so beginning in their first fiscal year after Dec. 15, 2020, rather than after Dec. 15, 2019, as originally planned.

The change would add a significant number of liabilities to the books of companies with a lot of leased space, so companies with cash and an aversion to debt may opt to buy buildings, if possible. Other companies might turn to coworking or other short-term space. But the jury is out on whether that will happen.

In any case, the extension is good, accountants and leasing brokers said, but no reason to procrastinate on making the switch.

“In our three-plus years of working on this, it’s clear that most companies have drastically underrated the complexity of this process and the time and effort to complete the task,” said Cresa Managing Principal Don Mitchell, who is in the company’s San Diego office. “It can be daunting.”

“Applying the standards has posed a more difficult challenge than originally thought,” said CohnReznick Director Matthew Derba, who is in the company’s New York office. “I believe the deferral by FASB is a direct reflection of that.”

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LeaseCrunch, News

LeaseCrunch™ Update

The LeaseCrunch™ team is pleased to announce the following updates:

  • Cost Center Enhancement. You can now assign multiple cost centers to an expense general ledger account.
    • Where is it? When adding or editing a lease, cost centers are now on the GL Accounts tab.
    • How does it work? I’m glad you asked. Visit our resources page to view our 1-minute explanation video.
    • What about my existing cost centers? If you already assigned a cost center for a lease, that cost center is now on the GL Accounts page for that lease. You can now edit a lease and allocate an expense item across up to nine additional cost centers.
  • Audit Trail. For any changes going forward, you will be able to see who edited what data fields and when for each lease.
    • Where is it? When viewing or editing a lease, click on Audit Trail in the upper right-hand corner of the screen.
    • How does it work? Once again, I’m glad you asked. Visit our resources page to view our 1-minute explanation video.
    • Anything else? You can also export the full audit trail for a lease to an Excel spreadsheet for further analysis.
  • Bulk Import Template Updated. If you are adding new transition leases to LeaseCrunch™, please be certain to use the latest template now available on the first step of the Bulk Import process.
  • Footnote for ASC 842. There are several items in the GAAP footnote disclosure that LeaseCrunch™ does not calculate: short-term lease expense, sublease income, and sale-leaseback gains/losses.
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