The new ASC 842 leases standard is now effective for private companies. Implementing an accounting standard as robust as ASC 842 can be complex and time consuming.
As you work through the implementation process, ensure you’ve completed all the necessary steps by considering the following questions:
- Have you gained a working knowledge of the new reporting requirements by reading the accounting standard and associated articles or attending training and webinars?
- Do you have an accurate inventory of all of your leases and their key terms such as renewal options? Are you confident the inventory is complete?
- Have you performed a review of your services contracts to determine if any contain elements of a lease?
- Have you determined if you need specialized lease accounting software, and if so, have you identified the best vendor?
- Do you clearly understand how the journal entries will impact your balance sheet and income statement along with the distinctions between operating and finance leases?
- Have you reviewed your internal controls over lease reporting and determined if any revisions are necessary?
- Have you evaluated all the practical expedients offered by the standard to determine which ones would be beneficial to adopt?
- If your financial statements are audited or reviewed by a third party, do you feel confident in providing them with your implementation memo and journal entries and the related footnote schedules?
The information provided in this communication is of a general nature and should not be considered professional advice. You should not act upon the information provided without obtaining specific professional advice. The information above is subject to change.