There has not been much publicity over the last two months about the proposed changes to lease accounting. However, it is our understanding the staffs of the Financial Accounting Standards Board (“FASB”) and the International Accounting Standards Board (“IASB”) (collectively “the Boards”) are near completion of a final standard to be issued by each of the Boards. How widely the standards will be exposed for public comment is unclear but we would expect that the standards would be ready for issuance by the end of 2015.
One major question that is still open is the effective date of the new standards. We would expect that the effective date would be no earlier than January 1, 2018 with the possibility that nonpublic business entities would get an additional year before effectiveness. Presuming an effective date of January 1, 2018, a calendar-year company that presents three-year comparative financial statements would apply the transition provisions on January 1, 2016 (i.e., the beginning of the earliest comparative period presented).
As we have said before, 2018 may seem to be far in the future but the work that is necessary to gather the lease information and perform the necessary calculations can be very challenging. Now is the time to start preparation. We at iLeasePro continue to monitor the project closely so that we can incorporate the final accounting changes into our state of the art technology solution for lessees.