The New Lease Accounting Standard: Lessons Learned

Public Knowledge, Private Lessons: Implementing & Maintaining the New Lease Accounting Standard (ASC 842)

Public companies have had to comply with the new lease accounting standard since the beginning of 2019. Analysis of their preparation successes and challenges provides critical ASC 842 lessons for private companies approaching a 2022 deadline. Explore the five lessons learned we’ve observed:

1. Finding leases is not straightforward.
2. Required lease data can be a challenge to abstract, migrate, and maintain.
3. Systems and processes may require more attention than expected – or desired.
4. The incremental borrowing rate is a complex issue.
5. Spread the word early about implementation.

ASC 842 dramatically increases the number of leases that companies may need to record on their balance sheets. The standard will likely have far-reaching implications, affecting areas such as accounting, real estate, legal, procurement, and technology. But companies do not need to start from scratch. ASC 842 lessons for private companies can be learned from their counterparts in the public arena, pointing out potential pitfalls and turning compliance into an ongoing advantage.