The new lease standard is coming and preparation is critical for a smooth implementation. This is easier said than done and the experts agree: this new standard is complicated.
Due to its complexity, much has already been written about the lease standard changes. You might be wondering how to discern which information can be described as reliable, thorough, and authoritative. To help you identify the best resources, we’ve compiled the following list of documents, guides, and examples.
Resource #1: ASC 842
You can’t get more authoritative than Update 2016-02 itself. The online resource has been divided into three sections:
Section A, The 185-page Accounting Standards Update. We recommend you use this to develop a baseline of knowledge about the new lease standard.
Section B, A 333-page record of the amendments made to the FASB Accounting Standards Codification®. We only recommend this for those who really want to reconcile the old and new lease standards… or if you struggle with insomnia.
Section C—If you want to know more about why certain changes were made, this is a 485-page document containing background information and the basis for conclusions about ASC 842.
Resource #1A: FASB Overview Material
We were undecided if this really counts as another resource, but it was too important to not mention the fact that FASB provides official summaries, press releases, videos, and webinars.
Resource #2: IFRS 16
If you need to comply with international accounting standards, you’ll need to access the 90-page IFRS 16 document, which differs from ASC 842. The most striking difference between IFRS 16 and ASC 842 is that IFRS 16 treats all leases as finance leases (formerly known as capital leases in the United States) – there is no concept of an operating lease. The International Accounting Standards Board (IASB) also provides an additional 57-page document with helpful illustrative examples on applying the new standard.
One catch: IASB is not generous with their distribution of materials and there is a cost to access these documents.
Resource #2A: IFRS Supporting Material
Not to be left behind, IFRS also offers educational materials. We have found their webcasts to be particularly helpful in understanding some of the standard’s nuances.
Resource #3: KPMG
KPMG quickly developed a wonderfully in-depth analysis of the new lease standard. Their 965-page Handbook on Leases was an immediate favorite for the LeaseCrunch® team. While it clearly isn’t brief, it does contain many examples and comparisons between the current ASC 840 standard and future ASC 842 standard. We like the Q&A format in this Handbook.
KPMG Resource #2: KPMG also has developed a variety of resources on detailed lease topics, including both webinars and in-person sessions. Thank you, KMPG!
Resource #4: PwC
Another guide that’s popular on the LeaseCrunch® team is PwC’s 316-page guide simply entitled, “Leases.” Just like KPMG’s guide, it has been updated, most recently in December 2018. We like it because it also provides examples and comparisons from a slightly different perspective and covers topics that others don't, like the treatment for sales tax.
Resource #5: Deloitte
The Roadmap Series of documents from Deloitte include this roadmap for leases, published in April 2018.
Further, Deloitte published this 41-page Heads Up document in 2016. While it is much more of a summary document than others in this list, we appreciate any resource that offers tangible examples of how different aspects of the lease standard should be applied.
Deloitte also published this 29-page document on IFRS 16 aptly entitled, Thinking Allowed. Both ASC 842 and IFRS 16 require a number of judgment calls in identifying and valuing lease-related components and this publication strives to help you identify and work through decision points that might be relevant for your business.
Resource #6: E&Y
E&Y took the time to compile this 425-page ASC 842 analysis and it was most recently updated in January 2019. Many lease standard details have evolved over recent months and E&Y is working hard to keep us all up to date.
Resource #7: Moss Adams
This 37-page document is much more of a summary than the previous resources. We like it because it includes great summaries about what companies will need to do to prepare for the standard, including what information needs to be gathered and the policy elections that need to be considered.
Resource #8: RSM
RSM published this 75-page document in May 2016. We particularly like the clarity of Section 3, where they’ve laid out a step-by-step Decision Point analysis to helps you determine if a contract would be considered a lease. Yes, there is even complexity in defining what is a lease.
Resource #9: BDO
By now, you might be feeling like there are only so many hundreds of pages that you can read about the new leasing standard. We get it, and that’s why we’ve included BDO’s webcast that offers a self-study course for CPE credits, or simply access to their podcast and handout materials.
Resource #10: Grant Thornton
And what about tax implications? While the new lease standard should have little effect on the income statement, there are calculation differences – most temporary – that might affect deferred taxes. Additionally, there might be some changes to sales, state, and foreign tax calculations. Grant Thornton kindly offers a summary of these potential changes that should be reviewed.
We appreciate all of the research, thought, and hard work placed into assembling these resources, designed to help all of us understand the implications of this new lease standard. It is because of these complexities that LeaseCrunch® was created: to allow you to adapt to the new standard with ease. To learn more, please contact us today!