Accounting Standards Bring Vehicle Leases Onto Contractors’ Balance Sheets

New Accounting Standards

Companies decide to lease for a number of different reasons, all of which remain viable under the new accounting standards. For public companies following FASB standards, the effective date for implementation is for the fiscal year beginning on or after Dec. These new accounting regulations will have a significant impact on companies that are leasing or expect to lease their vehicle fleet.

Both the IASB and the FASB have stated that the intent behind these revisions was to improve the transparency related to lease assets. Full-service lease products will make the accounting more complicated due to the presence of the services component in the lease payment. This accounting change may result in significant investments of time and resources to ensure that companies are ready to implement the requirements under this standard.

As the new standards take effect, proper reporting, compliance and other associated factors need to be considered in the decision-making process.

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