Starting January 1, organizations whose finance and operations personnel are on the same page will benefit the most.
Fleets of all sizes are under more scrutiny than ever, and operations and finance stakeholders have had to partner closely to ensure a holistic view of requirements and costs. In a few months, however, the rubric will change and compel an even greater collaboration between those who sign on the dotted line and those who rely on forklifts every day.
On Jan. 1, 2019, the Finance Accounting Standards Board’s FASB13 will take effect. Here’s a very brief summary of its more than 100 pages of accounting verbiage: Under current accounting standards, capital leases are reported on the balance sheet as an asset and liability.
Operating leases, however, are supposed to be footnoted on the balance sheet but are expensed on the income statement. Under the new generally accepted accounting principles (GAAP), all leases (capital and operating) will be accounted for on the balance sheet as Right of Use (ROU) assets.
Sue Rice, marketing manager for Raymond Leasing, The Raymond Corp.’s captive leasing company, explains.