It's Time to Get Ready for Big Changes in Lease Accounting Standards
On January 06, 2016, the International Accounting Standards Board (IASB) issued International Financial Reporting Standards (IFRS) 16 Leases. On February 25, 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2016-02, Leases (Topic 842) also known as Accounting Standards Codification (ASC) 842.
Both IFRS 16 and ASC 842 are the result of the IASB and FASB efforts to meet the objective of improved transparency and comparability while improving financial reporting.
However, unlike the converged standard for Revenue Recognition (IFRS 15 and ASC 606), the new leasing standards are not converged. This means there are differences in how the two accounting standards handle certain accounting transactions.
In contrast to the lessee accounting model in Topic 842, which distinguishes between finance leases and operating leases in the financial statements, the lessee accounting model in IFRS 16 requires all leases to be accounted for consistent with the Topic 842 approach for finance leases.
Consequently, leases classified as operating leases under Topic 842 will be accounted for differently under GAAP than under IFRS and will have a different effect on the statement of comprehensive income and the statement of cash flows under IFRS 16 than under previous IFRS standards.
As an innovation partner with both SAP and Nakisa, Bramasol brings together a range of solutions and expertise to help you assess and implement the FASB and IASB leasing standards. These solutions unify disparate leasing data and provide a clear view to make informed decisions on leasing liabilities while conforming with the new requirements.
