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Why You Need to Think About the New Lease Standards

Posted by James A. Krupinski, CPA

Jan 21, 2016 4:30:00 AM

The new lease standard will be issued in early 2016.   Public companies will be required to comply with the new standard for periods beginning after December 15, 2018, while for private companies it will be for periods beginning after December 15, 2019.  Early adoption will be permitted upon issuance of the standard, and a proactive approach can lead to a smooth transition. 

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Topics: leasing



ATTN: Private Companies with VIE Leasing Arrangements

Posted by James A. Krupinski, CPA

Apr 3, 2014 2:22:00 PM

Financial Accounting Standards Board (FASB) has adopted the recommendation from the Private Company Council (the PCC) and in March 2014 issued Accounting Standards Update (ASU) No. 2014-07, Consolidation (Topic 810) – Applying Variable Interest Entities Guidance to Common Control Leasing Arrangements (ASU 2014-07). The ASU 2014-07 will be effective for fiscal years beginning after December 15, 2014 and interim periods thereafter, early adoption will also be permitted, including application to any period for which the entity's annual or interim financial statements have not yet been made available for issuance. This allows a private company to adopt ASU 2014-07 in their 2013 financial statements.

ASU 2014-07 affects private companies that are required to consolidate a variable interest entity (VIE) under common control due to a leasing arrangement. A typical example of this would be when a building with a mortgage is held in a separate entity (Lessor) and the operating company, related through common ownership, leases the building from the Lessor and guarantees the mortgage. The Lessor is considered a VIE and typically would require consolidation with the operating company. ASU 2014-07 provides a scope exception to private companies with regards to VIE guidance under accounting principles generally accepted in the United States of America (GAAP) as long as the following requirements are met:

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Topics: gaap, fasb, leasing, vie, asu-2014-07, private companies, pcc, variable interest entity





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