Lease Accounting + ASC 842
As the Financial Accounting Standards Board (FASB) implements new standards for lease accounting, businesses in all industries are significantly shifting their accounting processes. Having a deep understanding of these requirements is crucial to ensure your business properly identifies its leases. When you choose Aldrich to assist with your implementation of the standard, our advisors will take care of you every step of the way.
What is ASC 842?
A lease that falls under ASC 842 is a contract or part of a contract that conveys the right to control the use of an identified property, plant, or piece of equipment for a specified period of time. Organizations that have a high number of leases face a potentially extensive implementation, encompassing technical accounting design and policy development, lease data management and abstraction, tax impacts and new ongoing processes, and workflow implications.
When does ASC 842 go into effect?
Non-public entities are required to adopt ASC 842 for fiscal years beginning after December 15, 2021. For most clients, that means it’s effective on January 1, 2022.
When you talk with an advisor at Aldrich, you’ll learn the steps your business needs to take in order to abide by ASC 842, as well as how to obtain long-term success with lease accounting. After witnessing the difficulties of implementing the standard in excel, we highly recommend the use of a software solution. Aldrich advisors can implement new standards in the software you’re most comfortable with, but we have existing arrangements with LeaseCrunch and LeaseQuery. Both solutions offer a CPA-approved, cloud-based software offering a wide range of benefits including:
- A bulk upload feature for importing multiple leases
- Calculations under the FASB, IFRS, and GASB standards
- Unlimited users
- Unlimited document storage
- Reporting on journal entries, amortization schedules, and financial statement disclosures
If you would prefer to import the leases into a software yourself, Aldrich can still assist with the initial software selection and can provide direction and assistance where needed.
LeaseCrunch is a simple and intuitive software that is a great solution for companies with basic calendar and reporting needs and a limited number of lessor transactions and subleases. The software is provided and billed through Aldrich but still gives you direct cloud-based access to manage your lease portfolio. There is no minimum number of leases required and Aldrich is available to assist with software implementation. You can watch a short demo of the software on the company’s website.
For companies with larger lease portfolios and more complex software needs (4-4-5 calendar, numerous subleases, lessor accounting needs), Aldrich is also a certified partner with LeaseQuery. Aldrich can help with implementation, but the software relationship is between your company and LeaseQuery. You can request a demo of the software on the company’s website.
Kellan Davis, CPA
Aldrich CPAs + Advisors LLP
Kellan has over five years of experience with national and regional public accounting firms working in a variety of industries including manufacturing, construction, software, lending, retail, telecommunications, nonprofit and benefits plans. He now actively serves his clients as a member of Aldrich Manufacturing and Distribution group and specializes in revenue recognition. Kellan is originally from... Read more Kellan Davis, CPA
- Revenue recognition
- Certified Public Accountant
- Lease accounting
More about lease accounting and ASC 842
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