Is Your Company Poised to Fail
Debt Covenants Without Warning?
On February 25, 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update 2016-02, Leases (Topic 842), its long-awaited standard on the accounting for leases. This brings revolutionary changes in lease accounting that will affect entities across all industries by December 31, 2019! The new standard requires lessees to recognize most leases on their balance sheet. It will also significantly affect the accounting for certain leases and may result in key impacts on an entity’s finances and operations which may mean that your company will need to implement new application solutions to manage these reporting and regulatory requirements.

Companies must be ready to adopt ASU 2016-02 and, more importantly, understand the impact on the financial statements and related debt covenant calculations. All too often management of businesses is consumed with running and managing the company’s day-to-day operations and cannot dedicate time to forward looking application/implications of changing accounting guidance. Let us help you understand the adoption and impact of the new accounting pronouncement relative to leases.
When Will This Impact My Company?
While early adoption is permitted, the effective dates and transition requirements for the amendment are:
• Public entities (which includes nonprofit entities that have issued,
or are conduit bond obligors of traded or listed securities)
Annual reporting periods beginning after December 15, 2018.
• Non-public entities
Annual reporting periods beginning after December 15, 2019.
Arnett Carbis Toothman LLP Can Help!
At Arnett Carbis Toothman LLP, we know how challenging it is to keep up with your normal day-to-day work, let alone to research and learn new accounting standards. We can help you understand how these reporting changes will impact your organization and assist you with a smooth transition to ASC 842 and eliminate any last minute surprises. One thing that we have found in working with our clients on similar projects is that it is never too early to start!

For more information, please contact your ACT representative. To learn more about the services we provide to companies like yours, please visit our website by clicking the logo below: