How to Prepare for ASC 842, the New Lease Accounting Standard
Posted by Kendall Fisher, Executive Producer and Host of The NetSuite Podcast
Ready or not, the new lease accounting standard, issued by FASB (Financial Accounting standard Board) as ASC 842 is here.Â
In fact, public companies with a calendar year-end will have already reported under the new leasing standard in the first quarter of 2019. Private companies with a calendar year-end will comply with the new standard beginning January 1, 2020.Â
Itâ€™s time for finance departments in private companies to take action now.
On this episode of â€œThe NetSuite Podcast,â€� weâ€™re diving into the most important facts to know about the standard and how to best prepare, thanks to our in-house expert on the topic, Carrie Augustine, CPA and Oracle NetSuiteâ€™s Software Industry Expert.
Augustine explains what changes to expect from ASC 842, especially with leases that might have been recorded as operational under the previous standard and are now considered capital leases. She dives into the impact these changes will have on a Companyâ€™s Balance Sheet, including the monthly adjustments that will need to be considered for net present value and interest. This is especially important as companies report ratios to investors and banks.Â
Thus, the new processes will require a lot of attention from accounting teams. Companies will need to create monthly schedules for interest expense and liability and understand how those payments will look moving forward.Â
Augustine advises all companies to take the steps to operationalize the process and how NetSuite can help. NetSuiteâ€™s fixed asset capabilities has a lease management functionality to automate the process and therefore prevent human error.Â
Listen to all of Augustineâ€™s insight and advice regarding the new lease accounting standard on Â Apple Podcasts, Soundcloud and YouTube. As always, donâ€™t forget to rate, review and subscribe!