FASB Finalizes New Guidance for Lease Accounting Standards – What You Need to Know
The pending changes in lease accounting have been a hot topic since the Financial Accounting Standards Board (FASB) and International Accounting Standards Board (IASB) issued a discussion paper for public comment in 2009. And on February 25, 2016, the FASB issued its final revision to the lease accounting standards.
The ASU makes significant changes to the accounting standards for leases. One of the main objectives of this guidance is to improve transparency by recognizing the lease-related assets and liabilities on the balance sheet for all arrangements with terms longer than 12 months. The new standard also provides transition guidance specific to sale and leaseback transactions, build-to-suit leases, leveraged leases and leases recognized as a result of a business combination. The standard will be effective for public companies in 2019 and for private companies in 2020, and early adoption is permitted.
We advise you to become familiar with this new guidance and understand how this will impact your restaurant’s financial reporting and decision-making. In addition to the impact this guidance has on your balance sheet, it may also have implications for your debt covenants and lease-versus-buy decisions.
BDO has released detailed guidance on the ASU, which can be found here
Stay tuned for more information about lease accounting standards for restaurants and training opportunities.
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