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The FASB decided that its lease standard will be effective for public companies with fiscal years
- The FASB decided that its lease standard will be effective for public companies with fiscal years (and interim periods within those fiscal years) beginning on or after December 15, 2018. For private companies, the standard will be effective one year later.
- Under the new standard, FASB has taken care the users of FS are given more information with less complexities.
- In the new standard, company have to report current off balance sheet leasing activities leading to assessment of lease-buy decisions
- Outstanding leases will come on balance sheet of the companies too.
- The new assets recognized for operating leases will change companies’ book/tax difference computations and could affect certain state and local tax apportionment calculations and transfer pricing.
- New FASB shall also retain the previous two types of leases, and is consistent with the lessee accounting model under existing GAAP.
My understanding of this new leasing standard is that there aren’t enough avenues laid out to show exactly what finances are laid out and to show exact terms of leases which is maybe why individuals and companies have requested this information. If an increase in transparency occurs, it allows for fewer questions and fewer reasons to question leasing and exactly what the intentions of a company are as well as created a more communicated action plan regarding finances and leases. The new leases also require more information on them than the old leases may have, so it would allow for all monies and finances to be more accounted for.