Lease Accounting (ASC 842) & Implementation
Ensuring Compliance & Financial Transparency for Nonprofits
The adoption of ASC 842: Lease Accounting Standards represents a significant shift in how nonprofits recognize, measure, and disclose lease agreements. At NCheng LLP, we help nonprofits navigate this transition seamlessly, ensuring compliance while improving financial reporting accuracy.
Whether you are implementing ASC 842 for the first time or need to refine your lease accounting processes, our team provide
Why Lease Accounting (ASC 842) Matter for Nonprofits
ASC 842 requires organizations to recognize most leases on the balance sheet, impacting financial statements, compliance, and funding considerations. Proper implementation ensures:
- Compliance with GAAP & FASB Regulations – Avoid penalties and ensure proper financial disclosures.
- Improved Financial Transparency – Strengthen reporting for grantors, donors, and board members.
- Accurate Budgeting & Decision-Making – Ensure leases are properly recorded and reflected in financial planning.
- Streamlined Audit & Reporting Processes – Reduce audit risks with standardized lease accounting practices.
Our Approach: Simplifying ASC 842 Implementation
We take a structured, nonprofit-focused approach to implementing ASC 842, ensuring compliance without disrupting your operations.
Lease Inventory & Data Collection
We identify and document all lease agreements, ensuring that your organization’s financial records reflect complete and accurate lease obligations.
- Review of existing lease contracts and agreements
- Classification of leases as finance or operating leases
- Identification of embedded leases and off-balance-sheet liabilities
Lease Accounting Policy Development
We help nonprofits establish clear policies and procedures for lease accounting in alignment with GAAP and ASC 842 requirements.
- Development of lease capitalization and depreciation policies
- Establishment of documentation and reporting protocols
- Integration with existing accounting policies and internal controls
Lease Accounting Calculation & Recognition
ASC 842 introduces new calculations for lease liability and right-of-use assets. Our team ensures accurate financial statement impact assessment.
- Initial and subsequent lease measurement calculations
- Determination of discount rates and present value calculations
- Proper amortization and expense recognition strategies
Financial Statement & Disclosure Preparation
We assist nonprofits in preparing accurate and GAAP-compliant financial reports with ASC 842 lease disclosures.
- Statement of Financial Position (Balance Sheet) updates
- Statement of Activities (Income Statement) adjustments
- Lease footnotes and financial disclosures for transparency
Lease Accounting System Implementation
We help nonprofits integrate lease accounting software or adjust existing accounting systems for ASC 842 compliance.
- Selection and setup of lease management software
- Training finance teams on lease accounting procedures
- Ongoing support for compliance monitoring and updates
Why Nonprofits Choose NCheng LLP for ASC 842 Compliance
Nonprofits face unique challenges in lease accounting, from donor-funded property leases to grant restrictions on lease expenses. Our team understands these complexities and provides tailored solutions that align with your mission and financial objectives.
Nonprofit-Specific Expertise – Decades of experience in nonprofit accounting and regulatory compliance. Seamless Implementation – Step-by-step support to ensure a smooth transition to ASC 842.
Customized Solutions – We tailor our approach based on your lease portfolio, funding structure, and operational needs.
Stay Compliant & Strengthen Financial Oversight
Let’s ensure your organization is financially sound, compliant, and positioned for growth. Contact us today to schedule a consultation and take the first step toward greater financial clarity and sustainability.
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