What are the upcoming changes in lease accounting standards?
An example of an AI chatbot conversation about future lease accounting standards and their implications.
What are the upcoming changes in lease accounting standards?
The upcoming changes in lease accounting standards primarily involve the implementation of ASC 842 and IFRS 16, which require lessees to recognize most leases on their balance sheets.
How will these changes affect financial statements?
These changes will increase reported assets and liabilities, impacting key financial ratios and potentially affecting loan covenants.
What should companies do to prepare for these changes?
Companies should start by reviewing their current lease agreements, assessing the impact on their financial statements, and updating their accounting policies.
Are there any exceptions to these new standards?
Yes, there are exceptions for short-term leases and leases of low-value assets, which may not need to be recognized on the balance sheet.
When do these new standards take effect?
The new standards took effect for public companies in 2019, while private companies have until 2022 to comply.
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