Businesses & Nonprofits: Don't Forget Lease Accounting Rules Are Changing in 2020
Starting in 2020, privately held companies and nonprofits must adopt new lease accounting rules which currently are in place for publicly traded companies.
Under these new rules, long-term leases over 12 months are now required to be reported on your balance sheet. This means showing both an asset (representing the right to use the leased asset) and a liability (representing the obligation to pay the rent, calculated at the present value of the expected lease payments).
This new rule impacts many items including leases of office space as well as leases of equipment and other assets (including copiers, computers and furniture).
Small organizations without complied, reviewed or audited financial statements will not need to follow these rules since they only have internally used financial documents.