Are You Ready? Reporting Changes for Leased Equipment Will Hit Private Manufacturers’ Balance Sheets

A change is coming for private manufacturing companies: new accounting rules that will, on average, more than double the average liability balance. The new lease accounting rules codified under ASC 842 have had major impacts on the accounting industry and resulted in material changes to many companies’ financial reports. And, although public companies have already adopted—and adapted to—the new rules, the January 1, 2022, effective date for private companies is quickly approaching. For the first time, most operating leases are required to be presented directly on the balance sheet in the form of a right-of-use asset and corresponding lease liability.