Jen: This is PKF Texas the Entrepreneurs Playbook. I’m Jen Lemanski, and I am back again with Danielle Supkis Cheek, a director and one of the faces of our PKF Texas Consulting team. Danielle, welcome back the Playbook.

Danielle: Always happy to be here.

Jen: So, we’ve had a few other directors in here talking about lease accounting, and I know the standards have changed a little bit since the last time we had—I think it was Chris Hatten was here. Can you give us a little bit of an overview about what’s happened with the delayed lease accounting standards?

Danielle: Yeah sure. The AICPA’s Technical Issues Committee actually wrote an unsolicited letter to the FASB requesting an extension related to… it was really mainly tied to… that we have a lot going on with the Revenue Recognition implementation, I think we talked about the past. And then adding it to the leases, the leases can change your balance sheet a lot, and I think we’ve had a lot of people talking about the implications to your balance sheet of the actual standard, that it can impact your covenants or various ratio analysis.


Continue Reading Get Started on Lease Accounting Now!

Breaking news this week – on Monday, May 13, 2019, the American Institute of Certified Public Accountants Private Companies Practice Section’s Technical Issues Committee (TIC) has sent a letter requesting the Financial Accounting Standards Board to delay the implementation of a new lease accounting standard for private companies.

The standard was made effective for public companies at the beginning of 2019, with an effective date for private companies slated for the start of 2020. TIC’s letter asks for a delay of one year for private company implementation.

According to a May 13, 2019 Journal of Accountancy article:


Continue Reading AICPA Technical Issues Committee Requests Delay of New Accounting Lease Standard

The Financial Accounting Standards Board (“FASB”) recently issued Accounting Standards Update (“ASU”) No. 2018-11 with targeted improvements to ASC Topic 842, Leases, to (1) add an optional transition method that would permit entities to apply the new requirements by recognizing a cumulative-effect adjustment to the opening balance of retained earnings in the year of adoption, and (2) provide a practical expedient for lessors regarding the separation of the lease and non-lease components of a contract.

Prior to the amendments in ASU No. 2018-11, the upcoming requirements in ASC 842 had to be initially applied using a modified retrospective transition method under which lessees were required to recognize lease assets and lease liabilities on the balance sheet for all leases and provide the new and enhanced disclosures for each comparative period presented. In response to constituents’ concerns about unanticipated costs and complexities, ASU No. 2018-11 now allows entities, upon initial adoption, to recognize a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. Under the new optional transition method, reporting for comparative periods presented must continue to follow the guidance under existing U.S. GAAP.


Continue Reading FASB Issues Targeted Improvements to New Lease Accounting Standard