Broker-Dealers with Operating Leases: SEC No-Action Relief
Article Excerpt:
In anticipation of Accounting Standards Update (ASU) No. 2016-02, Leases (Topic 842) becoming effective, now is a good time to discuss the potential impact of this new guidance from the Financial Accounting Standards Board (FASB) on accounting for operating leases for broker-dealers. For public entities, the effective date is for fiscal years after December 15, 2018 and, for all other entities, for fiscal years after December 15, 2019.
Under the new standard, lessees with operating leases that have a term greater than 12 months would be required to recognize these leases on their statement of financial condition. The lease liability is to be measured at the present value of the lease payments with a related “right-of-use asset.”