N EWS Dawn of the New Lease Accounting Standard A standard on Feb. 25. Th e new standard will take eff ect for fi nancial periods starting aft er Dec. 15, 2018 for public companies and aft er Dec. 15, 2019 for private companies. For companies with calendar year ends, the rules will take eff ect in 2019 for public companies and in 2020 for private companies. T LONG LAST, the Financial Accounting Standards Board released a new lease accounting the release of two Exposure Draft s— Changes in accounting rules that in 2010 and in 2013—that generated would bring all or most leases on bal-Navigating the New Lease Accounting Standard Equipment Leasing and Finance Association hundreds of comment letters and ance sheet have been under considera-February 2016 other feedback from stakeholders. Th e tion by the accounting standard set-resulting two-lease model for lessee ters since 2006. ELFA has put forth a accounting is similar to U.S. GAAP major eff ort and invested signifi cant today, as are the new rules, in general, resources into the lease accounting for lessor accounting. project over the years to ensure a “We thank the ELFA members, workable and sound standard to re-their customers and other stakehold-place FAS 13. ers, including the U.S. Chamber of Upon release of the new standard, Commerce, who helped us to engage ELFA President and CEO Ralph Petta constructively with the standard set-released the following statement: ters over the past decade. Ever since “We welcome the release of the the Securities and Exchange Com-new lease accounting standard from mission called on the FASB to revamp the Financial Accounting Standards lease accounting rules as part of an ef-Board. Aft er many years of anticipat-fort to harmonize accounting stand-ing the new standard and attendant Download this white paper and other resources at www.elfaonline.org/Issues/ ards worldwide, our focus has been uncertainty in the marketplace, com-Accounting/?fa=LAS. on ensuring a workable standard that panies can now move forward and accurately refl ects the economics of the lease transaction and prepare to adopt it. does not harm American businesses and the U.S. economy. “Th e good news is that under the new lease accounting Without this coordinated eff ort, we could be facing a far dif-rules, businesses nationwide will continue to enjoy the ben-ferent outcome that could have imposed far more onerous efi ts of engaging in the $1 trillion U.S. equipment fi nance compliance and fi nancial burdens on lessees and lessors. industry, which promotes business expansion, job creation “Now we enter a new phase of planning for implementa-and U.S. economic growth. tion. With the new standard scheduled to take eff ect in 2019 “Although the new standard will change how leases are for public companies and a year later for private fi rms, now accounted for on corporate balance sheets, it will not impact is the time to prepare. ELFA is organizing a number of activi-the ability of companies to acquire productive equipment ties and creating a number of new resources to help lessees to grow their businesses. Th ere are many reasons to lease and lessors meet the challenges of transitioning to the new equipment, and the primary reasons will remain intact un-rules. We are also developing a work group of experts to be der the new rules, from maintaining cash fl ow, to preserving a sounding board on implementation issues that may arise, capital, to obtaining fl exible fi nancial solutions, to avoiding so we can continue to be a resource to the FASB on the lease obsolescence. accounting rules going forward.” “We appreciate that the FASB was receptive to input from For more information on the new standard, visit the ELFA members in developing the new standard. Th e fi nal ELFA website at www.elfaonline.org/Issues/Accounting/ . rules improved signifi cantly from where they began through 4 MARCH/APRIL 2016 EQUIPMENT LEASING & FINANCE MAGAZINE