The new lease accounting standard (ASC 842) requires companies to recognize most leased assets and liabilities on the balance sheet. This enhances the transparency of these previously obscured financial obligations. Companies with significant leasing activities must be prepared for the impact of this new standard, which will require a change to their existing accounting processes and systems.
For many businesses, equipment financing is a good option to purchase a valuable piece of machinery and gain ownership through regular payments over time. Whether it’s an electrician with just one truck or a multimillion-dollar machine shop, most companies need to invest in equipment to function and generate revenue.
Navigating Equipment Financing with FASB Compliance in Mind
Equipment Financing and FASB Compliance The type of equipment and its intended useful life should be considered to assess tax implications. Also important are any potential maintenance costs and a plan for the eventual return or replacement of the equipment.
While a loan may offer lower rates and longer terms, it typically requires a larger down payment than a lease. An important consideration is a business’s credit history to ensure that it can afford the monthly payments. The right equipment financing provider can provide the capital needed for growth while ensuring that your company’s credit rating and operating history are preserved. An expert can help with choosing the right lender for your unique needs.
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