Effective January 1, 2020, non-public companies (January 1, 2019 for public companies) are required to comply with ASC 842 – Leases. Under ASC 842, companies will need to re-evaluate each of their existing leases, old and new contracts to see how the new definition of a lease will affect their current arrangements.
Key decision points include:
Companies generally may not understand the resource requirement necessary to implement the new standard. Is your company properly equipped with “technology solutions” to help organize and analyze leases to make adequate financial and business decisions? Software solutions to help deal with leases may be cost prohibitive, and it is important to find a vendor that understands your company’s needs and can keep costs within budget.
While the primary focus regarding ASC 842 has been on compliance and financial accounting, companies must additionally consider tax implications the new standard presents.
Has your company considered naming someone to lead the transition so the company can effectively overcome early challenges and concerns regarding the implementation?