By: Editorial Staff, Date: November 29th, 2022

The current state of the market across industries reflects in the way companies adapt and respond to changes impacting a wider aspect of better financial service. These changes are tied up with expanded economic transitions that are taking place today after the hard shocks from the Covid-19 pandemic hit us.

On the compliance front, most businesses are gearing up to meet compliance requirements within a specified timeframe. In particular, accounting challenges in the leasing sector include achieving compliance in the wake of new accounting standards: Financial Accounting Standards Board (FASB), ASC 842, and International Accounting Standards Board (IASB). However, identifying opportunities for a business in light of its financial health comes to the fore of compliance.

lease accounting,lease,accounting

What is Lease Accounting?

Accounting for lease is a process by which a business entity keeps track of its financial activities and all its lease-related revenues and expenses. Recording a lease on the financial statements such as the balance sheet, income statement, and cash flow statement gives the overall picture of the business’s financial health.

Organizations in the US such as Financial Accounting Standards Board (FASB), Government Accounting Standards Board (GASB), and the International Accounting Standards Board (IASB) set the rules that govern lease classifications.

A Snapshot: The New ASC 842

When the FASB issued Accounting Standards Update No. 2016-02 in 2016, it came to be known as Leases (Topic 842) or ASC 842. The updated lease accounting rule aims to promote transparency in lease agreements by requiring companies under US GAAP to record their lease assets on the balance sheet. Thus, reporting under Topic 842 requires the lessees to report both the assets and liabilities from the leasing arrangements. An exception to this rule shall apply to businesses operating in less than a 12-month term.

Lease Accounting Software Solutions

Automating your lease portfolio management and other tasks for your business is right within your reach. Combine technology with technical support so you can achieve and maintain compliance with the accounting standards beyond ASC 842. By choosing the right software for your lease portfolio, you can minimize errors and mitigate further risks.

Meet your partner in lease portfolio management and discover practicable solutions for enhanced business performance, improved efficiency, and informed decisions. Contact Visual Lease.

Sources:

https://www.mondaq.com/unitedstates/accounting-standards/1236794/get-ready-for-the-new-lease-accounting-standard

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