LeaseAccelerator, the pioneer in the Enterprise Lease Accounting software market, announced today the release of an analysis of SEC Comment Letters related to ASC 842 lease accounting and disclosures. The study reviewed trends over the first 10 months of 2019, which was the period that more than 90% of public companies adopted the new lease standard, ASC 842. The goal of the study is to help public companies identify the most common disclosure challenges as they prepare their first annual reports using ASC 842 over the coming weeks. Comments were sourced from MyLogIQ.
The new lease accounting standard was adopted by most calendar year-end public business entities (PBEs) in the interim first quarter of 2019. ASC 842 was the most significant new accounting standard adopted in 2019 and for some companies, the most significant change in decades. Many companies had to manage organizing and migrating hundreds, if not thousands of leases onto new accounting software with new controls, processes and procedures. Although the sheer volume and magnitude of this feat was daunting, many companies discovered the most significant challenges were due to the standard’s complexity, new disclosures, and operational impacts.
ASC 842 requires a number of additional quantitative and qualitative disclosures that were not required in the previous Topic 840 standard. Many of the SEC comments were requests for additional details on a company’s analysis, assumptions, judgments and supporting documentation. Others were inquiries about specific interim disclosures and request for additional details. In total, the analysis identified comments on 15 different topic areas across three primary categories – lessee-specific accounting, general lease accounting, sale/leaseback and other transactions. Examples of topics included lease classification, discount rates, impairments, incentives, residual value guarantees, variable lease expense, short-term lease expense, sale/leaseback transactions, comparative reporting, and intercompany accounting.
“We hope this synopsis of SEC comment letters will help companies save time as they prepare their first annual reports and undergo their first external audits under ASC 842,” said Michael Keeler, CEO at LeaseAccelerator. “The new leasing standards are one of the biggest accounting changes in history. As we approach the one-year anniversary of the effective date, large public companies are still struggling to make the necessary business process changes. Many are re-evaluating their systems approach to make greater use of technology to best manage the leasing lifecycle and automate financial reporting.” noted Keeler.
The full report can be found here: https://leaseaccounting.com/asc-842-sec-comment-letters/
LeaseAccelerator offers the market-leading SaaS solution for Enterprise Lease Accounting, enabling compliance with the new ASC 842, IFRS 16 and GASB 87 standards. LeaseAccelerator’s proprietary Global Lease Accounting Engine makes it simple, fast, and easy for customers to generate the required accounting and disclosures. LeaseAccelerator’s Real Estate, Lease Sourcing, and Lease Management applications generate considerable savings through smarter procurement and easier management. Learn more at: http://www.leaseaccelerator.com/.