We get it. Sometimes putting things off is just good common sense. Go ahead and leave those holiday lights up. Skip out on the after-dinner dishes, and it can be our little secret. Other times, hitting snooze is a fast track to all-out chaos.
Think of the new lease accounting standard as yardwork. You could let the grass go to seed until your ASC 842 effective date nears, but you’ll end up with a pile of put-off work. Public companies already dug into ASC 842, proving that it requires dedicated time and resources. For private companies, the ASC 842 effective date is coming up faster than you can say “fertilizer,” at your fiscal year-end.
But adoption doesn’t have to be another dreaded to-do. A prompt start allows you to reimagine your lease accounting. Weed out your lease portfolio with an eye for how the pandemic changed your company’s fiscal landscape. Your ASC 842 effective date plants the seed for informed lease review and negotiations, adopting the right lease-management software and adjustments to remote and hybrid workplaces.
ASC 842 also means the terms have changed—literally. But, beyond reclassifying leases, you may need a second (or third, or fourth) set of hands to complete a comprehensive lease inventory and unearth buried embedded leases before digging into practical expedients (implementation shortcuts), discount rates and capitalization thresholds. The new standard may also reveal the need for a fresh look at your lease management software with iron-clad disclosure and reporting in mind.
Most gardeners worth their salt keep an eye on the next season and the one after that. Looking into the future, CFOs need a firm grasp on how and when finance and operating leases affect balance sheets, especially as leases are renewed and renegotiated. You’ll also need a clear plan-of-action for communicating financial-statement changes to company stakeholders.
There’s an opportunity for new growth, too. If your company moved to a remote or hybrid structure, the new lease accounting standard is a chance to assess whether you’d be better served by short-term leases, which stay off the balance sheet after the ASC 842 effective date.
Some jobs are just too big and too important to go it alone. You wouldn’t try to trim those twenty-foot oaks in your front yard on your own. You also wouldn’t stall until an overgrown limb takes out your roof. A healthy head start is crucial when it comes to your ASC 842 effective date. When you need seasoned, hands-on expertise to get to the root of lease accounting standard changes, CBIZ and MHM has thoughtful, meticulous professionals ready to help. Let us know if we can help tend your lease portfolio.
Want to learn more about implementing the new lease accounting standard? Download our eBook, 4 Keys to Lease Accounting for CFOs.