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Experts Say Fleets Should Prepare for New Lease Accounting Rules

Posted November 21, 2017

Under Logistics & Supply Chain Issues

(Fran Matso Lysiak – Transport Topics)

Fleets that lease their trucks should start preparing now for new lease accounting rules that begin taking effect for public companies at the end of next year, accounting professionals and industry experts said.

With the new accounting standards, the biggest change is that operating leases will now be recorded on the balance sheet with capital leases, said Jason Miller, CPA and a partner with Katz, Sapper & Miller, an Indianapolis-based accounting firm. “All long-term leases will be presented on the balance sheet.”

A capital lease is a lease in which the lessor only finances the leased asset, and all other rights of ownership transfer to the lessee.

An operating lease is the rental of an asset from a lessor but not under terms that would classify it as a capital lease. The operating lease allows a business to keep from recording the asset on its balance sheet. This type of arrangement is known as off-balance sheet financing, per the Accounting Tools website.

The new rules will apply to all types of businesses for anything that is leased. “It could be a copier,” Miller said. Click here to read more.

Related: Get Ready for FASB’s Lease Accounting Rules (Banking Exchange)