Privately held firms are struggling with applying new lease accounting standards, staff and board members reported at a recent FASB meeting.
Private companies are more likely to operate with oral or unwritten lease agreements than their publicly traded counterparts, FASB said.
The concerns follow new lease accounting standards from FASB aimed at accounting for and shining a spotlight on the risks and liabilities that leases can pose for companies.
Under the rules, companies must disclose operational leases on the balance sheet, both as an asset and a liability. Previously, companies disclosed operating leases as expenses on the income statement and in the footnote of the financials.
FASB is now considering tweaking the standards for the treatment of leases in financial reports, one of three major standards currently undergoing post-implementation reviews. Learn more.