At its November 11, 2015 meeting, the Financial Accounting Standards Board (“FASB” or “the Board”) decided in principle to approve the proposed changes to lease accounting. We would expect that the final leases standard would be published in the first quarter of 2016.
Additionally, at this meeting, the FASB decided that for public business entities, the final leases standard will be effective for fiscal years beginning after December 31, 2018 (essentially January 1, 2019) and for nonpublic business entities, the effective date would be for fiscal years beginning after December 15, 2019 (essentially January 1, 2020).
It is not that surprising that the effective dates are well out into the future since the Board had to defer the originally determined effective date of the highly complex revenue recognition standard. In the case of the leases standard, we are sure that the Board wanted to provide sufficient lead time for implementation.
Although these effective dates are years away, it would be prudent for all those companies impacted by the leases standard to start preparing for this transition in 2016. Remember that many leases that are executed in 2016 will be grandfathered into the new standard.
For additional information, please visit https://ileasepro.com/