Private companies get another year for ASC 842 implementation

The current timeline for implementing ASC 842 (the new lease accounting standard) calls for public entities to implement this year (fiscal years starting after Dec. 15, 2018, including interim periods of this fiscal year). Private companies get another year (fiscal years starting after Dec. 15, 2019, with implementation only required as of year-end; interim periods not required until the following year).

At the FASB's July 17 meeting, the Board tentatively approved delaying implementation by a full year for private entities, as part of a larger program of staggering effective dates on several major new accounting standards. The proposal is to allow two years between implementation by public and private entities for Topic 326, Financial Instruments—Credit Losses, Topic 842, Leases, and the recent amendments to Topic 815, Derivatives and Hedging. The boards have opened up the proposal for 30 days of public comments. Based on prior experience, final approval is virtually certain.

Thus, private entities (including not-for-profit organizations, except those with bonds that are traded publicly) would not need to implement ASC 842 until fiscal year 2021 (to be precise, fiscal years starting after Dec. 15, 2020). Implementation is still not required until the end of the fiscal year; interim periods don't have to be reported under the new standard until the following fiscal year. However, earlier adoption is allowed. (We believe most users will find it less confusing and ultimately less work to implement ASC 842 at the beginning of a fiscal year, including all interim periods under the new regime.)

This will reduce the pressure on private companies, which often have fewer resources to handle changes in accounting. However, it doesn't eliminate the need to organize your lease portfolio and get it ready for the new standard. Our EZLease software can help you with reporting under the current FAS 13 standard while you prepare for the future.