When you are managing a large organization, it is obvious you will be aware of operating leases. In simple terms, an operating lease is a contract that permits the use of an asset without giving the authority or conveying ownership rights of that asset. An operating lease is also known as off-balance sheet financing as the leased asset and relevant liabilities of rent payments won’t be mentioned in the balance sheet of the company in order to minimize the ratio of debt to equity low. Well, operating leases are counted as renting and lease payments as operating expenses.

After the introduction of the new financial reporting standard, FRS 116 from 1st January 2019, some changes have been established. The major change is that now all leases will be treated as a finance lease. So, it has become mandatory for both operating leases and finance leases to be mentioned in the balance sheet of your company along with profit and loss accounts.

The implementation of FRS 116 will introduce new rules for the recognition, measurement, presentation, and disclosure of operating leases. The new accounting standard includes a disclosure objective in order to provide both parties of financial statements with information sufficient to evaluate the amount, timing and uncertainty of cash flows occurring from leases. But, before adapting new regulations, you have to implement the new accounting standards for your lease accounting.

There are many outsourcing companies that can help you out in this complicated situation. The experts of these companies will assure a perfect implementation for your lease accounting and its presentation and discloser. They will make sure to complete the task flawlessly with a cost-effective solution for managing your lease accounts.

If you are ready to implement FRS 116 for your lease accounting, adapting its regulations and principles and its discloser for both parties, you can hire the professionals of a reputable outsourcing companies.

For more information visit: http://www.outsourcingwise.com/lease-accounting/