Feb 25, 2016
From the Financial Reporting Network
This edition of Defining Issues reports that the FASB issued ASU 2016-02, Leases (Topic 842), on February 25, 2016. The new standard ushers in a new era in which lessees will recognize most leases on-balance sheet. This will increase their reported assets and liabilities – in some cases very significantly. Lessor accounting remains substantially similar to current U.S. GAAP.
ASU 2016-02 is effective for public business entities, certain not-for-profit entities, and certain employee benefit plans for annual and interim periods in fiscal years beginning after December 15, 2018. For all other entities it is effective for annual periods beginning after December 15, 2019, and interim periods in fiscal years beginning after December 15, 2020. ASU 2016-02 mandates a modified retrospective transition method for all entities.
The following publications and this Defining Issues will help you navigate the changes required by, and understand some of the business impacts of, the new standard.
- Summary of Similarities and Differences between U.S. GAAP and IFRS provides a summary comparison of ASU 2016-02 to its international counterpart – IFRS 16, Leases. The IASB issued IFRS 16 on January 13, 2016, and it is effective for annual periods beginning on or after January 1, 2019.
- Executive Accounting Update – Lessees is a four-page executive-level overview of the new lease accounting standard from a lessee’s perspective.
- Executive Accounting Update – Lessors is a four-page executive-level overview of the new lease accounting standard from a lessor’s perspective.
KPMG will host a 90-minute CFO Financial Forum Webcast on March 7, 2016, to provide an overview of the new standard. Register for the Webcast or use the link at the end of this Defining Issues publication.