Lease Standard Education Series for Nonprofits – Series Introduction
The new lease standard, Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) 842, is effective for nonprofits with fiscal years beginning after December 15, 2021, which means financial statement calendar 2022-year ends and fiscal years ending in 2023, or in other words, now! CLA will be rolling out an educational series designed to give nonprofits the confidence they need to successfully implement this new lease standard.
Prior to FASB ASC 842, accounting principles generally accepted in the United States only required leases classified as capital leases (financing under the new standard) to be recognized on the Statement of Financial Position. For leases classified as operating leases, rent expense was included on the Statement of Activities and lease commitments were included as part of note disclosures to the financial statements.
The core principle of the new standard is that all leases (with some exceptions) create an asset and a liability for the lessee. A lessee should recognize on the Statement of Financial Position a liability for lease payments and a right-of-use asset representing its right to use the underlying asset for the lease term.
In our upcoming lease series for nonprofits, we will discuss the finer points and considerations associated with lease accounting. We will look at policy elections, lease population, practical expedients, lease term, discount rates, embedded leases, sample journal entries, in-depth examples, financial statement presentation and disclosures, and other matters. Stay connected and let’s tackle this new standard together! Be sure to subscribe to the CLA nonprofit industry blog and related email subscriptions so you do not miss the upcoming content.
How can CLA help?
As mentioned before, the new lease standard is here. Take proactive steps today to understand its impact on your nonprofit. CLA has the lease resources to help assess its impacts beyond general accounting and financial reporting, and walk you through readiness assessment, software selection and analysis, and implementation.
A turnkey lease accounting option can include:
- Assistance to identify and analyze leases that are subject to the standard
- Delivery of leased asset schedules, journal entries, and comprehensive footnote disclosures
- Updated and revised information at future interim or annual periods based on your needs
I only have 2 leases (building space/occupancy and copiers), but I will be joining your seminars as I implement the standard for my 6/30 reporting. Looking forward to it.