Transition to new accounting standards
Both FASB and IFRS announced new standards in 2016. These were created in order to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements.
• For FASB, ASC 840 is replaced by ASC 842
• For IFRS, IAS 17 is replaced by IFRS 16
Both standards come into effect as of the start of the 2019 financial year, with a transition period of three years.
All lease accounting contracts based on the old accounting standards (IAS 17 and ASC 840) must be converted to the new standards (IFRS 16 and ASC 842).
• Under IFRS 16, most leases will be classified as finance lease and reported on the balance sheet as a liability and right-of-use; this will have a significant impact on financial performance indicators. Under ASC 842, both finance lease and operating lease will be reported on the balance sheet.
• From 2019 onwards, real estate lease figures will need to be calculated and reported in compliance with the new standards.
• During the transition period 2017 – 2019, a two-folded reporting is required and a process for additional data acquisition and lease evaluation will need to be put in place.
 | Although you need to transfer to the new standards per 2019, it is supported by Planon to transition to the new standards earlier. |