Private Companies: Are You Ready for ASC 842?

At this point, you have likely participated in enough webinars and other conversations to understand that the new lease standard, codified as Accounting Standard Codification (ASC) 842, brings operating leases onto the balance sheet. While you know it is coming and likely have a general sense of the adoption effort, the devil is in the details.

We understand that with lean accounting and finance departments, and an ever-changing accounting landscape, companies often struggle with the accounting and financial reporting requirements of non-recurring transactions and the adoption of new standards. The new lease guidance, ASC 842, can be especially complex and time consuming.

For that reason, Stout has developed Your Guide to Accounting Standard Codification (ASC) 842, intend­ed to provide practical guidance and key takeaways from our experience with both public and private company adoptions.

Your Guide to Accounting Standard Codification (ASC) 842 addresses:

• 5 Actions to Take – We’ve worked with close to 100 clients in their transition to ASC 842 and have gained several key insights along the way. In this part of the guide, we share the five most important actions for private companies to take as they implement the latest lease accounting standard.
• Key Considerations for Private Companies – In this section of the guide, we cover the most critical things you need to know as you develop your transition plan: adoption timeline, practical expedients, and common procedures required to gain completeness over the lease population.
• Impairment Considerations – Regardless of adoption status, all companies should be considering the potential impairment risk introduced by ASC 842. Similar to owned long-lived assets held and used, right-of-use (ROU) assets recorded in accordance with ASC 842 must be tested for impairment under ASC 360, Property, Plant, and Equipment. While ROU asset impairment testing may seem like an issue for the future, it has implications that companies should consider now as they work to adopt ASC 842.
• How to Calculate the Balance Sheet Impact – The adoption of ASC 842 results in the recognition of both a lease liability and an ROU asset. We’ll discuss the initial and subsequent calculations of lease liability and ROU asset values.
• Lease Accounting Considerations in Business Combinations – A part of a business combination, an acquirer may assume the existing leases of the acquiree, under which the acquiree is the lessee. Based on this transaction type, the acquirer must consider several factors that we’ll discuss.

Download the guide now.

Our professionals have extensive experience with all aspects of lease accounting and are uniquely positioned to support your adoption process. We offer a flexible approach to adoption and post-adoption support and can tailor our services based on your needs, budget, and internal resource capacity. Because Stout is not a CPA firm, we can provide a full range of deliverables, including supporting schedules, journal entries, and accounting memoranda. When you work with Stout, you can expect:

• Senior-level attention throughout the project
• A partner who understands your business, challenges, and needs
• A practical, flexible approach that enables us to deliver within your timeline

To learn more on how we can help you implement the new lease accounting standard, download Your Guide to Accounting Standard Codification (ASC) 842 now.