The governing boards created new standards for lease accounting based on feedback from investors and users of financial statements requesting more visibility regarding future lease obligations and lease receivables. Lessors will mirror the accounting on the lessee side, recognizing a lease receivable and deferred inflow of resources.
The primary change to lease accounting is that organizations must recognize lease assets and lease liabilities on the balance sheet for most of their lease arrangements. In the leasing business in over 30 years where in the previous instance many companies were using off-balance sheet financing to have leases and they were not required to report them on their balance sheet with the adoption of ASC 842. With these changes most of companies had quite a significant impact in the leasing industry. The rules of voluntary disclosure will apply to non-filing affiliates that qualify under the. The FASB’s new leases standard (Topic 842) has now been adopted by all public companies reporting under US GAAP, and most of those companies have issued their first set of annual financial statements under Topic 842. without further opportunity to settle or waive penalties.
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