FASB moves lease standard to final draft

Image courtesy of DollarPhotoClub.com
Image courtesy of DollarPhotoClub.com

By a 6-1 vote, on 11/11/15 FASB authorized their staff to prepare the final draft of the lease standard. When the final draft is ready, it will be routed to the board members for a final, written vote.

Final standard is expected in early 2016.

(Cross-post from my other blog, Nonprofit Update.)

In extremely brief terms, the standard will require bringing essentially all leases on to the balance sheet. A ‘right to use’ asset will be recorded along with a liability.

Essentially, this will capitalize all leases with a term over one year.

Impact on some big public companies, such as the airlines or big box stores, will be dramatic. I am guessing there will be an impact on essentially all nonprofit organizations, but the impact will be rather small for most.

Effective date will be years beginning after 12/15/18 for public companies with a one year delay for private companies.

That translates into year-end financials as follows:

  • 12/31/19 – public companies
  • 12/31/20 – private companies

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