FASB ASU 2016-02 Effective December 2021. While many organizations began implementing the standard a few years ago, it wasn’t until December 2021 that the most significant lease asset rules in a generation went into effect. Many companies are now struggling with interpretation AND implementation of FASB ASU 2016-02 only to find out that issues are many. From a Real Estate perspective, this change directly impacts most national and multi-national organizations that Lease real estate whether its office, manufacturing, retail or distribution.
In short, the new standard requires companies that lease assets, Lessees, to recognize the lease on the balance sheet. In effect recognizing the assets AND liabilities for the rights AND obligations created by the leases.
Under the new rules, a Lessee will be required to recognize assets and liabilities for leases with lease terms of more than 12 months. Going forward, a lease will be classified as a finance or operating lease with both recognized on the balance sheet.
Corporate | Asset | Advisory
