FASB finalizes lease accounting standard

The Financial Accounting Standards Board (FASB) has voted to proceed with a new accounting standard that would require companies and other organizations to include lease obligations on their balance sheets. The final Accounting Standards Update (ASU) is expected to be published in early 2016.

The FASB board decided that for public companies, the upcoming standard will be effective for fiscal years (and interim periods within those fiscal years) beginning after December 15, 2018; for private companies, the standard will be effective for annual periods beginning after December 15, 2019. Early adoption will be permitted for all companies and organizations upon issuance of the standard.

As a next step, the FASB staff will complete a “ballot draft” of the ASU that includes all of the board’s final decisions. The ballot draft will be shared with each of the seven board members, who will review it to ensure that it accurately reflects decisions made throughout their public deliberations. When the board is satisfied that the ballot draft reflects its intentions, the draft will be submitted to production for final publication.

“We believe that this new standard is important because it will provide investors, lenders and other users of financial statements a more accurate picture of the long-term financial obligations of the companies to which they provide capital,” said FASB chairman Russell Golden (pictured above).