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Now is the Time to Prepare for New Accounting Standards

  Arthur F. Rothberg, Managing Director, CFO Edge, LLC  
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  Article Summary  
Rapidly-approaching implementation dates for FASB and IASB changes in revenue recognition and lease accounting mean now is the time to prepare for new accounting standards.

Revenue Recognition Standard ASU 2014-9 is being updated to increase consistency across all industries in long-term contract revenue recognition and reporting, thereby enhancing financial statement evaluations and comparisons.

Lease Accounting Standard ASU 2016-02 is being updated to require that assets leased for more than one year (such as real estate, equipment and vehicles) be added to balance sheets as liabilities with offsets for reporting “right-of-use” value matched to lease payments due as a corresponding liability. The increase in balance sheet debt can significantly impact financial ratios upon which debt covenants are based and make it more challenging to obtain financing.

Reviewed in the full article are specific steps that should be taken now to mitigate the potential negative impact of the new revenue recognition and lease accounting standards when they are implemented.

Los Angeles and Southern California executives can benefit from talking with a provider of outsourced CFO services who can review current revenue streams, accounting processes and debt covenants, as well as proactively plan a course of action to assure a smooth transition when the standards become effective.

  Open as PDF Open the entire article as a downloadable PDF (No form completion is requested.)  
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