Key Differences Between Current GAAP and The New Lease Standard
In this post we will address the differences between current GAAP and FASB’s new lease accounting standard, with a focus on lessees. Note that unlike other blogs covering accounting for leases, we won’t simply state the obvious, which is that all leases will be capitalized, no grandfathering, and an exemption for short term leases. Instead, we will actually cover some very important differences between the current and newly proposed lease accounting rules. For instance, we will address differences that could cause a company to end up with a different liability when the exact same lease is capitalized under the new lease accounting rules versus capitalization under current GAAP. These differences could have a significant impact on your lease portfolio during the transition period. Let’s get started:
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About LeaseQuery: LeaseQuery is lease management software that helps companies manage their leases. Rather than relying on excel spreadsheets, our clients use LeaseQuery to get alerts for critical dates (renewals, etc), calculate the straight-line amortization of rent and TI allowances per GAAP, provide the required monthly journal entries (for both capital and operating leases) and provide the commitment disclosure reports required in the notes and the MD&A. Contact us here.
