Businesses can ease into planning for upcoming lease accounting changes by using new tools - an infographic, checklist and article - provided by the Equipment Leasing and Finance Association (ELFA) and the Equipment Finance Advantage website for end users.
The new lease accounting rules take effect in 2019 for public companies and a year later for private firms.
"The primary reasons to lease equipment will remain intact under the new standard, which is known as Accounting Standards Codificaiton Topic 842 (ASC 842)," writes Ralph Petta, ELFA President and CEO, in a new bylined article. "One of the key changes is that leases previously classified as operating leases under current accounting standards will now be capitalized and thus reported on corporate balance sheets. With the changes in balance sheet reporting, some financial statement ratios may be affected."
Businesses can start preparing by:
- Reading up on the changes in the new article by Petta.
- Using the organizational checklist for lessors.
- Following a new infographic, which starts with the recommendation of budgeting time and resources for the transition and ends with identifying gaps in performance and capabilities.
“ELFA is pleased to offer a wide range of resources customized to the specific needs of lessors and lessees to help as they transition to the new lease accounting standard,” Petta said. “The information is compiled with the input and generous commitment of our Financial Accounting Committee so users benefit from a wealth of professional industry expertise. The good news is that there are many reasons to lease equipment, and the many benefits of leasing will remain intact under the new rules, from maintaining cash flow, to preserving capital, to obtaining flexible financial solutions, to avoiding obsolescence.”
Key Equipment Finance offers lease accounting guidance with this interactive graphic.
To get the ELFA tools, visit here: