RPC CPAs + Consultants, LLP (RPC) has merged with the nationally recognized accounting firm of Carr, Riggs & Ingram, LLC (CRI) and our offices will now operate under the name of Carr, Riggs & Ingram.
We will continue our tradition of community support and delivering quality audit, accounting, tax, and consulting services - now with enhanced service capabilities available from a regional firm that is one of the Top 20 firms in the U.S. For more informaiton regarding CRI's 50+ office locations, more than 1,800 professionals, or industry and service specializations, visit our new firm's website at www.CRIcpa.com.
Lessees will recognize a right-of-use asset and corresponding liability on the balance sheet for ALL leases with the only real exception being bona fide leases covering a period of fewer than 12 months. The liability is to be measured as the present value of the future minimum lease payments (taking into account renewal options only if there is either an incentive to renew or disincentive to not renew which is obvious at the inception of the lease) PLUS initial direct costs – which (in a narrowing of practice) will only include incrementally incurred costs such as commissions but will no longer include items such as legal fees and negotiation costs. ONLY lease payments which are fixed will be subject to this initial measurement. Other amounts of rent which are contingent will be recognized annually or when the contingency ripens.
So in short, the accounting for leases have changed drastically. All leases, even non-capital leases, will be recorded on all GAAP basis financials statements. These changes potentially could have an effect on loan covenants and bonding requirements. Please contact us if you have any questions concerning this new pronouncements.
Click here for the full newsletter issued by FASB that explains the new standard in more detail and explains why they made the changes.