The FASB today issued a new accounting standard for leases.
ASU 2016-02, Leases (Topic 842), ushers in a new era in which lessees will recognize most leases “on-balance sheet.” This will increase their reported assets and liabilities—in some cases very significantly. Lessor accounting remains substantially similar to current U.S. GAAP.
ASU 2016-02 is effective for public business entities, certain not-for-profit entities, and certain employee benefit plans for annual and interim periods in fiscal years beginning after December 15, 2018. For all other entities it is effective for annual periods beginning after December 15, 2019, and interim periods in fiscal years beginning after December 15, 2020. ASU 2016-02 mandates a modified retrospective transition method for all entities.
Read a February 2016 report prepared by KPMG LLP: Defining Issues: FASB Balloons Balance Sheet with New Lease Accounting Standard
The following publications will help in navigating the changes required by, and to understand some of the business impacts of, the new standard.
KPMG will host a 90-minute CFO Financial Forum Webcast on March 7, 2016, to provide an overview of the new standard. Register for the webcast or use the link at the end of today’s Defining Issues publication.
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