One of the crucial areas, a business person has to handle while running a company, is lease accounting. It is needless to say how complicated and time-taking to manage these accounts in order to accomplish various business operations without investing the total amount required. Most companies even take outsourcing services to handle these accounts and relevant tasks so that they can save more money and free up time for core operations.

A company handles different types of lease accounting. And, operating lease is a significant one. If you have been running your business for the past few years, you must be aware of these particular lease options very well. But, if that’s not the case, we have explained operating lease, the impact of the new standard on it and implementation of the new standards to set new regulations for recognition, measurement, presentation, and disclosure of operating leases for your better understanding.

An Overview of an Operating Lease:

If we put it simply, an operating lease is a contract between two parties that give one the privilege of using an asset without getting the ownership rights of that specific asset. In the past, the business owners don’t include the operating leases on the annual balance sheet of their companies and treat it as off-balance sheet financing to keep the ratio of debt to equity low. However, that has been changes now after the introduction of FRS 116 on 1st January 2019. Know about the changes in the following part.

Changes in Operating Lease after Implementation of the New Standard, FRS 116:

The business owners have witnessed many changes that have been reformed the definition of leases including an operating lease. Here some significant changes in lease accounting after the introduction and implementation of FRS 116.

All leases will be considered on-balance sheet financing

New requirements have been set for the assets and liabilities

FRS 116 changes the accounting for leaseback and sale

New requirements are introduced for non-lease elements, variable lease payments and option periods and operating lease disclosure

Hassle-free Implementation of FRS 116:

Implementing the new standard is undoubtedly taxing for both beginners and fully-fledged businessmen. If you are also finding it tough to implement the new standard and set new principles for accounting and disclosure of operating leases, you must count on the experts of well-reputed companies. They will help you out even in handling your operating leases and others.

The implementation of new accounting standards is a must for continuing managing your lease accounting smoothly. If you are thinking about taking help of well-reputed companies for implementing FRS 116 for your operating lease accounting and disclosure, contact the experts now. Visit the websites of these companies or consult with the service providers for further info.

For More Information Visit : http://www.outsourcingwise.com/lease-accounting/